The Weekly Take from CBRE

Galvanize Climate Solutions’ Joe Sumberg and CBRE Chief Sustainability Officer Rob Bernard share insights on achieving high returns through sustainable investment strategies.

·     Profitable Sustainability: Commercial real estate investment strategies that integrate today’s sustainability and decarbonization technologies can enhance returns.

·     Economic Opportunities: There is high occupier demand for green buildings, presenting investment opportunities.

·     Technological Integration is the key: Using energy-efficiency systems and AI can enhance the operating performance and value of real estate assets.

·     Strategic Market Focus: Regulatory frameworks and government incentives can increase the appeal of sustainable investment strategies in certain markets.

Each new generation brings opportunities and challenges to the workplace. Recorded live at ICSC Detroit, leaders from two Michigan-based real estate families, the Schostaks and the Friedmans, discuss the hard but necessary conversations and choices required to maintain a multi-generational enterprise.

Share these insights on succession planning in family-owned businesses:

·      Succession Planning: Establish clear governance and involve family members in decision-making to ensure smooth leadership transitions.

·      Leadership Transition: Transferring leadership to the next generation requires structured processes and clear roles.

·      Family and Business Balance: Balance family dynamics with business operations, making necessary sacrifices for success.

·      Adaptability: Evolve business models and diversify services to stay competitive.

·      Economic Resilience: Maintain liquidity and seize opportunities during economic downturns.

Stories are what make information memorable and communications more impactful. Author and business consultant Esther Choy discusses business storytelling, emphasizing how engaging narratives can be more persuasive and increase connections with audiences.

Share these insights on how to use storytelling to improve the impact of communications

1.    Remember the “IRS” model: The Intriguing Beginning, Riveting Middle, and Satisfying End framework helps professionals craft compelling narratives.

2.    Make emotional connections: Effective storytelling connects with audiences on an emotional level, enhancing understanding of information that influences decision-making.

3.    Be memorable: Storytelling makes your messages more memorable and meaningful.

4.    Express empathy and curiosity: A good business story, like any story, feels human and personal, while delivering an insight.

Wharton organizational psychologist and New York Times-bestselling author Adam Grant shares insights on making better business decisions, fostering innovation and how your personal "challenge network” can lead to superior products and delight your customers.

Share these insights on how to be a successful leader:

1.    Encourage Humor and Humility: They help maintain a flexible and open-minded approach, making it easier to rethink and adapt.

2.    Have Pre-Mortems: Discuss as many potential failures as possible before launching. That way you can prevent or know how to handle problems when they occur.

3.    Eschew Best Practices for Better Practices: “Best Practices” implies there’s only one right way, while seeking “Better Practices” encourages people to innovate and try new things.

4.    Build a Challenge Network: Maintain a group of trusted critics who provide truly honest feedback to improve your decision-making.

5.    Reward Speaking Truth to Power: Encourage employees to ask questions, suggest improvements and challenge outdated ideas.

Manulife’s Jessica Harrison and CBRE’s Kevin Aussef join us from the CBRE Investor Symposium, where they highlight investment opportunities, particularly in alternative asset classes.

Share these insights:

-     Market Momentum: Real estate capital markets are gaining momentum, as the gap between buyer and seller expectations narrows.

-     Strategic Investment: Sectors like affordable housing, cold storage, and industrial outdoor storage present attractive opportunities.

-     Market Reset and Repricing: Investors are setting their sights on higher returns, even for lower-risk assets.

-     New Approach: Manulife has transformed into a private equity real estate investor and launched new investment strategies to capitalize on market opportunities.

-     Tech Advances: AI enhances operational efficiencies and predictive analytics, improving underwriting and investment decisions.

We explore Chicago's vibrant real estate scene with CIBC’s Karen Case and CBRE’s Lisa Konieczka. They discuss market dynamics, Fulton Market's emergence and transformation, and ongoing capital markets challenges and opportunities.

Share these insights about Chicago real estate:

-     The Big Split: Chicago's office market is bifurcated: creditworthy occupiers looking for high-quality space will have limited options while much of the rest of the market languishes amid a glut of space.

-     Important Amenities: Advanced technology, workout facilities and unique features in the best buildings will help  attract tenants and draw people back to the office.

-     Capital Markets Challenges: High costs and limited access to capital have slowed new development significantly, exacerbating the shortage of premium-quality space.

-     Transportation Networks: Chicago's excellent transportation infrastructure supports its diverse economy and enhances its appeal as a business hub.

-     Strategic Transformation: Fulton Market has evolved into a vibrant live-work-play area, attracting major tenants and showcasing successful urban redevelopment.

Two self-storage experts—Merit Hill Capital’s Liz Schlesinger and CBRE’s Nick Walker—discuss the sector's strong long-term fundamentals and near-term challenges facing this resilient asset class, including a tepid housing market.

Share these insights about the self-storage industry fundamentals:

1. Operators understand the customer: Self-storage customers prioritize proximity and convenience over amenities.
2. Data plays a huge role: Savvy investors use data to inform site selection and identify market trends such as the increasing demand for units in urban areas.
3. The housing market impacts demand: Investors should be aware of the potential risks and opportunities associated with housing market fluctuations.
4. Operational expertise required: Self-storage relies heavily on operational expertise to maximize returns.

Ray Washburne is an accomplished investor with an eclectic portfolio that spans shopping centers, restaurants, energy and more. Washburne offers a unique perspective on market trends, Investment opportunities and the the evolution of cities.

Retail

• Unique Identity Wins: Local restaurants and regional brand dining experiences are essential to attracting visitors to a city or neighborhood.
• Bifurcation of Retail: High-end luxury retailers and those that offervalue to consumers are doing well.

Office

• Demolition Over Conversion: Many older offices are being demolished due to high conversion costs and antiquated construction.
• Amenities Matter: Office buildings with unique amenities are commanding higher rents and driving tenant demand.

Cities & The Economy

·     Urban Revitalization: Cities are experiencing a resurgence with new developments driving growth and investment.

·     Caution Persists: A large federal deficit, high consumer credit card debt, and sticky inflation are making it essential for investors to be prepared for extended volatility.

Swire Properties’ Henry Bott and CBRE's Troy Ballard examine Miami's growth, appeal to global investors and the Residences at Mandarin Oriental, Swire's luxury condominium project on Brickell Key Island.

Share these insights about opportunities in Miami:

1. Miami is thriving: The city is growing rapidly, with strong demand for housing driven by an increasing population.
2. Luxury housing is in demand: The Residences at Mandarin Oriental is a prime example of the demand for high-end housing in Miami.
3. International investors: Miami’s multi-faceted appeal is attracting buyers from around the world.
4. Demographics are changing: Brickell, for instance, has attracted a younger population base.
5. Adaptive re-use opportunities: The office market in Miami has softened, but conversion and redevelopment projects are underway.

Stoneshield Capital’s Juan Pepa and CBRE's Adolfo Ramirez-Escudero discuss Spain's economic renaissance, which has engendered bountiful investment opportunities.

Share these insights about investment opportunities in Spain:

1. Spain has great fundamentals: Gone are the dog days following the Global Financial Crisis. Spain's high economic growth rate has made it an attractive investment destination.
2. Focus on alternative real estate sectors: Some of Spain’s strongest sectors are student housing, life sciences and seniors housing.
3. Renewable energy is in demand: Interest in energy and sustainable infrastructure, particularly around data centers and the industrial sectors, is high.
4. Big pharma has a big presence: A consolidation of big pharma companies makes the region attractive for life sciences investment.
5. It’s a business-friendly environment: Incentive programs and a supportive regulatory environment has drawn inbound capital.