Take ten minutes to learn about what stock market investors think about Commercial Real Estate with Cole Smead, CEO of Smead Capital Management. Cole gives us some insight into the valuation differences between the stock market and real estate market and how they could intersect more in the future…Here are my quick takeaways:
— The way commercial real estate will get in trouble is building hope on lower interest rates- short term or long term.
— Even stock market investors know that not all assets are the same. Leasing office space without amenities is going to be a tough road. But fresh (new construction) always sells (leases up).
— Cleaning up the office market won’t be quick. It will take about 5 years, as significant refinancing hits the market over the next 2-3 years.
— The stock market could collide with the commercial real estate world when investors use public equities to transact in private real estate markets.
— Office demand is down approximately 30% due, in part, to the fictitious employee of the future, Lola. She is a working mother with at least 2 kids. Lola will return to the office but only if it works for her and her entire family. Real estate developers need to study her as she is the key demographic for employees coming back to the office.
Please enjoy the conversation with Cole Smead. I know I did.
