The XLRE chart looks like its gaining some steam.... Do you think diversified enough away from distressed office and retail properties?
It’s also a proxy rate bet, which is quite timely. i remember someone saying that commercial RE will turn when jobs are gonna be harder to find - so employers will have more power to force RTO.
Why the CRE crisis never happened is a puzzle to me. I haven’t seen a comprehensive analysis of the state of the market. Are they just still extending and pretending, or was the dropoff in demand not that bad, or is the market going to get smacked in a year or two when loans come due, etc.
I don’t foresee the job market ever again being like it was in 2008, to say nothing of even worse prior recessions. Demographics mean that labor is going to be in short supply both locally (in many countries) and in the world as a whole for the remainder of our lives, at least.
I think its like you say, extend and pretend. Right now, it seems like banks are going down, and that will all be papered over. Many properties have already sold for fractions, and those people had to take a steep haircut. But I believe its just getting started. RE going forward is a dead investment if you ask me, both commercial and residential. 40 years of dropping rates has meant a one sided market, and now the next few decades will be the opposite. The need for CRE is so much smaller in this new economy and technological era. Its like the need for CDs, DVDs, and even hard drives. First 2 are totally gone, and third has been replaced by SSDs.
Are you kidding me? In Canada, the tons of people they brought in on student and work Visas have no work!! The local young people can't find jobs for the summer. The line ups for job fares stretch a mile long. There is no labor shortage. Perhaps there is a shortage of high paying jobs, but flooding the market with low skilled workers doesn't solve anything.
People still consume music and movies....The data storage and bandwith requirements to consume that media previously consumed from CD's and DVDs has been moved elsewhere. Real Estate is certainty not a dead investment, IMO.
Around here it’s apparent that even where stranded CRE assets exist, there is still considerable value to be had in redeveloping the land as mixed-use or residential. My guess is that the “crisis” manifests as 5-8 years of subpar returns for real-estate funds as income is less than previously expected, and asset writedowns are periodically incurred.
You might be correct but I am looking for unemployment levels to rise and inventory levels to rise at those warehouse and distribution centers and falling prices and mark down sales on Amazon.....Also for housing prices to become affordable and Blackstone to get out of the residential market. It needs to happen. Gen Z is really starting to get PO'd over high prices. That's how bloody revolutions begin.