They may have discussed the nuances of onshoring, friendhoring, nearshoring and repatriation, but speakers at the National Association of REALTORS® C5 Summit this week agreed this: American companies are looking to bring their operations back abroad, or at least closer to home. — in part to prevent future supply chain problems.
“COVID has been a wake-up call,” CNBC commentator Ron Insana told conference attendees during a conversation with Nadeem Meghji, Blackstone’s head of Real Estate America. “We’re seeing companies move from a just-in-time model to a just-in-case model.” This means more opportunities for US brokers, especially those operating in business-friendly environments.
Blackstone, which buys companies along with their underlying real estate assets, owns nearly $600 billion in assets worldwide. “One of the benefits of being a global company is being able to see what works and what doesn’t,” Meghji said. “Globally speaking, warehouse logistics has been a theme for us, not only in the US, but now also in Europe and Asia.”
Nearly 500 brokers, trade organizations and economic development professionals gathered for the C5 Summit this week in New York, the second year NAR has hosted the commercial real estate conference. (The “5” in the event title stands for capital, connection, trade, community, and trade.)
Meghji was not the only speaker to extol the strength of the warehouse sector. Other brokers and analysts speaking at the conference agreed that warehouses need to stay strong. Several speakers also mentioned life sciences, biotechnology and healthcare as sectors that will continue to perform well. With the growth of streaming content, Blackstone is also investing in film production facilities.
Self-storage facilities, which took off in 2019 and 2020, were cited by many speakers as a sector that is holding its own. NAR economist Lawrence Yun said one factor was the housing shortage and resulting high prices. People are doubling up to save money, moving in with their parents or grandparents. “They need a place to put all their stuff,” he said. “So I think self-storage will continue to have legs.”
Although the office market remains a question mark, 2021 has been a phenomenal year for many commercial real estate sectors, and 2022 and 2023 are set to see only a slight decline. Factors of concern include continued interest rate hikes and geopolitical strife. But having real estate in the right place and in the right sectors is an excellent hedge. “We have geared our entire business around assets with cash flow growth,” Meghji said.
As any savvy real estate investor knows, location is everything. For example, Meghji says Blackstone doesn’t look at warehouses or distribution centers in remote locations, but focuses on locations close to larger populations, where businesses can meet last-mile delivery demands.
Throughout the conference, speakers discussed the importance of setting and achieving environmental, social and governance goals. Investors and tenants demand it, and governments impose and encourage it. “And it’s the right thing to do for the planet,” Meghji said. “Real estate happens to be a pretty big emitter of greenhouse gases.”
Blackstone aims to be carbon neutral by 2025. It achieves this not only by improving the energy efficiency of its buildings, but also by investing in renewable solutions, such as hydro, wind and solar. solar.
With the strength of the US dollar, there was also a lot of talk at C5 about whether the US would continue to be a target for foreign investment. The consensus was that it would, but other countries are competing. In a session on opportunities in Dubai, Shadi Bteddini, CEO of Century 21 United Arab Emirates and Century 21 India, said money is flowing into Dubai because the government has taken the right steps to attract foreign investment. . Bteddini is also CEO of Front Desk Real Estate, the international administrator of Dubai’s land department, a role aimed at attracting global investors to Dubai.
Blackstone’s Meghji called India a growth market; the country is “producing hundreds of thousands of engineers” and moving from a source of mostly low-level technology support to an innovator. And the Indian government is finally taking steps to build the infrastructure needed to meet the demands of a growing middle class.
But both speakers said the United States continued to be a safe haven for investment. Bteddini said Dubai had $8 billion in assets under management in the United States and was looking to double that amount. Meghji said the United States is still the best place to invest. “I wouldn’t bet against this country and the opportunity we have in front of us,” he said.