Real estate expectations and market realities

Finding alpha – Identifying opportunities in a changing landscape

As the nation’s and world’s economies start to emerge from the deadly pandemic amid historically low interest rates, investors are leaving no stone unturned in their quest for higher returns. The search for “alpha” is intensifying amid the surge of capital pumped into the markets by the Federal Reserve’s (Fed’s) aggressive monetary policies and the government’s fiscal stimulus.

Reconsidering the alternative investments

This past year has amplified the existing bifurcation in the CRE market, with some property types thriving and others really struggling in this COVID-19 environment. As COVID-19 begins to dissipate, finding alpha will largely be identifying which property types and markets present the greatest opportunities for investors, recognizing that some of the changes brought upon by COVID-19 may be here to stay.

The private market can certainly take a page from the public market. Major institutional capital sources need to think creatively about what CRE investment can be. Instead of being limited to the core property types, investors are now looking into single-family housing, infrastructure and data centers, to name just a few.