The AFIRE Podcast

Contrary to reports of the death of office, demand for certain classes of office space is coming back so strong that New York City developers are struggling to meet the demand.

Melissa Román Burch is New York City Economic Development Corporation’s Chief Operating Officer, and says, “Office is making a comeback. We fundamentally do not have enough class A and A+ office space in New York City, and we have too much class B and C.”

In fact, Burch says New York currently has 2.4 million square feet of office space under construction that will be delivered by 2026—and almost 80% of that space already is spoken for.

“So, what we’re going to see really unlock for New York City in 2025 is continued investment into modernizing office space and delivering new,” explains Burch. “We need to do this because we know that New York City will continue to be powered by a very strong economy, excellent job growth, and a global center for work.”

Other themes:

- How sustainability plays a part in office resurgence

- What class A and A+ buildings will look like in 2025

- How class A and A+ buildings attract different usage patterns

- How office can drive investor interest in underserved areas

Watch the video or listen to the audio episode for answers.

We left 2024 expecting surprises from political change and geopolitical shifts. But according to Rebecca Rockey, Deputy Chief Economist and Global Head of Forecasting at Cushman & Wakefield, the actual surprise in store during the year ahead may be how little things change.

For example, some anticipate a widespread sell off of distressed commercial real estate assets in 2025. But Rockey believes the pace will be much slower than many expect. Rather than a cliff event, she predicts a slow burn that continues well into 2026 and perhaps even into 2027.

“I don’t think we will have a shortage of surprises out of DC,” says Rockey, who lives in the area. “But I think there are forces in motion that are going to play out next year, regardless of what’s happening in the policy environment.”

“…specifically around the capital markets, which are a defining feature of this cycle for commercial real estate. We’ve clearly gone through some repricing, we’ve seen capital sources start to shift around in response to that, and as we move forward this year those shifts in capital sources will continue to play out—and I think those changes will be much more prolonged than just 2025.”

Other themes:

What shifts does Rockey expect in the capital markets?

Will distressed deals tick up in the year ahead—and by how much?

Where the best opportunities are hiding in 2025?

Watch the video or listen to the audio episode for answers.

Our special New Year series provides themes to monitor in the year ahead for commercial real estate investors.

This episode of the AFIRE Podcast features R. Byron Carlock Jr., PWC’s former US real estate leader and AFIRE’s current director of legal and tax, discussing the most important investment to make in 2025.

AFIRE CEO Gunnar Branson asks Carlock:

You can make one bet in 2025—what is that investment you’ll make this year?

What is it that commercial real estate investors need to worry about in 2025?

Will 2025 be the year that regulators grow more comfortable with density in our cities?

How should investors be thinking about the next five to ten years?

Who will be the leaders in real estate investing over the next 10 years?

What do you hope will happen for our built environments in 2025?

As we look out at the year ahead—should we expect more surprises from the capital markets? What about politics? Geopolitics? Will we see more friction for cross-border investing—or less?

Watch the video or listen to the audio episode for answers.

What are the markets that commercial real estate investors are focused on in 2025? Will markets even matter this year? And which markets are best positioned to outperform?

Sabrina Unger is the managing director and the head of research and strategy at American Realty Advisors—and one of the people AFIRE turns to for nuanced commentary on what’s really going on in commercial real estate.

“Market selection as a driver of relative over- or under-performance may actually be reduced relative to some of the other levers that we have to pull when it comes to making geographic selection within a sector,” says Unger.

“When we look back over history . . . the dispersion between the best and worst multifamily markets—that dispersion is the widest during periods of adjustment.” So, Unger says, dispersions were widest during the 2008 global financial crisis, the supply surge in 2016 and during the pandemic. “But outside these periods, market fundamentals… tend to cluster much closer together.”

Consequently, the market narrative may actually be disguising really strong sub-market opportunities. Which is why her team has implemented a new sub-market targeting strategy. Or, in her words, “There’s a way to take advantage of that arbitrage.”

A recent report from Cushman & Wakefield suggests that “urban doom loops” can be halted and reversed when investors, developers, and planners optimize the built environment for a balance of “live, work, and play” design suited to modern (and continually evolving) social tastes.

https://www.afire.org/podcast/202413cast/

In this episode of the AFIRE Podcast, Rebecca Rockey, deputy chief economist and global head of forecasting for Cushman & Wakefield joins AFIRE CEO Gunnar Branson to discuss the report’s key findings.

The report, “Reimagining Cities: Disrupting the Urban Doom Loop,” shows that an average US downtown has about 70% of its real estate devoted to work purposes. But the optimal pie chart for walkable urban places (WalkUPs) is far more mixed, with work environments accounting for just 42% of real estate, while 31% is for live purposes and 26% for play.

Consequently, in this fascinating conversation focused on the reinvigoration of American cities after the pandemic, Rockey suggests that downtowns seeking to counteract the doom loop decrease the proportion of “work” and increase the amount of real estate devoted to live and play purposes – and that investors, developers, and planners can lead the charge.

Many of the challenges facing the US real estate market mirror those seen in the Asia-Pacific region.

https://www.afire.org/podcast/202412cast/

So as investors are planning for the rest of the year, it’s the perfect time to speak with Simon Treacy of Singapore’s CapitaLand Investment, which manages properties in more than 40 countries.

Treacy is the CEO of CapitaLand’s Private Equity Real Estate, Real Assets division, and says “The world is pretty much synchronized now. The same discussions you’re having in the US—we’re having in most markets around Asia.”

On tap: What are Treacy’s predictions for the rest of 2024? What’s in store for valuations? How will changing interest rates affect global property markets? And are we finally going to see a breakthrough from a sluggish market to something that’s a little more active?

Plus: Lessons for the US market from an Asian perspective. “We are starting to see [that] we’re coming towards the end game of the interest rate cycle,” Treacy says. “And as a consequence of that, we’re just starting to see transactions click up a little bit more.”

How can affordable housing become a reality in cities like New York, whose current blueprint and zoning regulation is not easily suited to modern market-rate and affordable housing development?

https://www.afire.org/podcast/202411cast/

In our latest episode of the AFIRE podcast, CEO and host Gunnar Branson speaks with David Kramer, president of the Hudson Companies, a leading developer in NYC, about what it takes to build affordable housing in a city made for anything but.

It’s a wide-ranging, entertaining conversation about the challenges of living and developing real estate in one of the most vibrant cities in the world—and America’s key “gateway” city. Kramer and Branson explore the tension between developer’s public profiles, and the realities of trying to build new projects in a sustainable way, while also nurturing a city that is hospitable to people from all walks of life.

Kramer also takes down the common misconception that landlords determine rents. In fact, Kramer says that achieving housing affordability starts with increasing the number of units in a given market. “The solution . . . should not be chastising landlords and trying to limit rent increases—it should be increasing the supply.”

With decades-worth of insider perspective and a whole host of entertaining analogies, Kramer’s interview provides a portrait of a New York developer doing his best to contribute to a city where people love to be—and what other cities can learn from this approach.

Forecasters are predicting another record-hot summer in North America. What’s hard to predict, though, is how environmental disasters will affect the real estate market around the country.

https://www.afire.org/podcast/202409cast/

Intense hurricanes, droughts and untamable wildfires are all playing roles in the increase of premiums—bringing insurance to the forefront of real estate investing like never before.

…which is why we’re talking now, in the latest episode of the AFIRE Podcast, with president and general counsel of EDGE Fund Advisors, Tiffany Sanders. The firm had owned their 1.1 million square foot building in downtown Manhattan for five months before Hurricane Sandy wreaked havoc on New York City in 2013, with tenants that included a major bank and two media companies. “[The property] was supposed to be a low-maintenance dividend-producing machine,” she explains.

What followed Hurricane Sandy was a long and arduous process of recovering from the storm’s aftermath—pumping out water from the building, replacing electrical equipment that had been fully submerged, and repairing damaged interiors. “You can’t turn that stuff back on,” Sanders recalls. “You have to rebuild it.”

For Sanders, the process yielded a better understanding of navigating insurance costs, preparing for the worst, and averting crises—all of which are things other investors may want to consider as we enter uncharted territory this summer. “We underestimate our vulnerability and we overestimate our readiness,” Sanders says.

After four years and $10M in flooding restoration, Sanders recounts her experience dealing with an environmental disaster and redesigning the building to keep tenants afloat post-storm. She also shares what she says other building owners should know about planning for climate disasters in the years ahead.

Melissa Román Burch is New York City Economic Development Corporation’s chief operating officer—and one of the speakers at the AFIRE Annual Member Meeting in New York City this September.

https://www.afire.org/podcast/202408cast/

She says the five boroughs are home to more than a million buildings and unprecedented employment growth, with more private sector jobs than ever before. But the city’s housing crisis threatens to limit economic development.

“For more than 40 years, job growth has outpaced housing growth,” Burch tells host Gunnar Branson, AFIRE CEO. “This is a multi-decade problem… that has reached an inflection point.” Rental-unit vacancy rate is down to a historic low, around 1.4%, she says, while at the same time, the office sector faces occupancy challenges, with more than 100 million square feet sitting empty.

To address the housing crisis, the city has unveiled a housing moonshot—a goal to build 500,000 new units over the next decade, about double the typical rate of supply.

Exactly how the city will go about achieving that, on some of the most expensive real estate in the world, is topic number one in our latest podcast episode, now streaming on all podcast platforms.

Mosaic Real Estate Investors CEO Ethan Penner, the latest guest on the AFIRE Podcast, doesn’t believe the office sector has hit bottom.

https://www.afire.org/podcast/202407cast/

Yet, at the beginning of 2024, Penner and his business partner Chad Carpenter announced a new US office-focused real estate finance company, Reven Office REIT, that intended to raise $1 billion to provide office owners and investors with bespoke financing solutions.

“Office is a very complicated investment asset today,” Penner says. “It’s something that has inspired fear in investors, and rightly so. But what’s interesting is that when fear becomes pervasive, markets are abandoned. And of course, babies are thrown out with bathwater.”

Penner and his partners are trying to find those “babies”—the office investments that continue to have upside, despite ongoing challenges for the sector.

In this episode of the AFIRE podcast, Penner explains his sometimes counterintuitive take on the health of the office sector with podcast host and AFIRE CEO, Gunnar Branson. Aside from his enthusiasm for finding overlooked gems in the sector, Penner holds concerns about the effect of AI on the future of office. “The [threat] that looms largest, that’s on the horizon, that people are in denial about,” Penner says, “is the impact of AI on jobs, period. I think that there’s a real threat— technology happens faster than people can imagine.”