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Real Estate Innovation, a Dilemma
The real estate sector is often perceived as sluggish and resistant to technological advancements. However, lots of big-name firms have been taking innovation seriously over the last decade. These firms deserve a lot of credit. Many of these firms would admit that the returns on this innovation have been underwhelming. This is not necessarily a Continue reading
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Real Estate Competitive Positioning
Which properties are likely to enjoy real rent growth through time? The first piece on this series of “Measuring the Moat” discussed the life cycle of properties and showed that properties depreciate (in real terms) quickly after construction. Through time property value shrinks towards land value and this gravity is fought by constant reinvestment. Therefore, Continue reading
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Competitive Life Cycle of Properties
What can we learn from the aging of properties? More than a decade ago, Michael Mauboussin wrote Measuring the Moat, a research piece on competitive strategy which I have always enjoyed and admired. It deals with companies, but is relevant to the real estate industry, as properties are just businesses. I started trying to put Continue reading
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It’s Time to Smile
Where Will the Best Opportunities be in coming years? Recently an investor asked us an interesting question. He noted that a lot of investors were interested in the Midwest. Given our “Rise of the Rest” focus, is that where we see the best opportunities today? Along similar lines, The Wall Street Journal recently released a Continue reading
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Robust Real Estate
5 Factors to Determine if a property is “anti-fragile” An old investment adage says that there are “fish for trading and fish for holding”. I don’t know the origins, as most fish don’t seem great for holding. For real estate it is true that some properties are more suitable for long-term holds than others. But Continue reading
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The 8 Types of Workspace
What the heck is the office market anyway? Making blanket statements about the “office” market is like watching Chris Helmsworth and Danny Devito do pushups and forming a conclusion about the health of “men”. In the U.S., there are about 100,000 individual buildings accounting for roughly ~10 billion square feet of space. Half of Continue reading
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It’s Time to Buy
In the early days of the pandemic, Marc Andreeson penned the piece It’s Time to Build. This argument for more manufacturing – of vaccines, machinery, chips, roads – was a compelling one, especially when rates were zero. It was true for real estate as well. Covid caused a shock to space usage, requiring more beds Continue reading
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Why the Tight CRE Debt Markets are a Positive
Real estate returns are largely driven by capital flows, especially debt. These cycles vacillate predictably through fear and greed, taking little time in the middle area of “fair value”. In the modern world of institutional real estate, there have been a few notable periods of “fear” and capital retreat. In hindsight, there were the best Continue reading
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How Attractive is Risk Today?
To fill a pail with rocks of different sizes, it’s better to put big rocks in first, and then finish with small rocks. Investing is similar. If you get the big questions right, you can get other stuff wrong and do well. The biggest question: “How much risk should I take right now?” For individuals, Continue reading
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My 5 Aha’s from Atomic Habits
The graph below is simple, but powerful. I don’t know how many times I have shared it with my 11 year old son. I am late to read this book which was released in 2018. My delinquency was not due to lack of interest. I took 5 things away from it, all of which I Continue reading
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