According to the CEO of a real estate investment firm, the commercial real estate market is headed for a crash that could be as devastating as the 2008-09 financial crisis. .
CARROLL Founder and CEO Patrick Carroll sounded the alarm about the state of the US commercial real estate market in a recent interview with CNBC.
“Unfortunately the party is over,” he said. “The office market will be destroyed, hotels will be destroyed. It will be ugly.”
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Dire warning for commercial real estate
Carroll isn’t the first to raise the alarm bells for the commercial real estate sector, and certainly won’t be the last.
ever since bankruptcy of silicon valley Experts expressed concern in March that a massive $1.5 trillion debt wall was looming over U.S. commercial real estate.
Its mortgage debt, mostly held by small and medium-sized banks, is due by the end of 2025.
“Lenders are reluctant to lend because they don’t know what the interest rate will be,” Mr. Carroll said.
Carroll added that the office suffered a dire “double whammy” and said the sector’s fundamentals were “horrible.”
“After COVID-19, people started working from home. Now the work week is Tuesday through Thursday, so people take up less office space and no one is in the space. They don’t want to make loans in … this is a disaster,” he said.
Real Estate Safe Haven?
There’s one niche real estate that’s surviving this wave, says Carroll. It’s multi-family real estate.
In contrast to commercial real estate, the multifamily market has “strong fundamentals,” Carroll said. Carroll’s real estate investment firm manages more than 33,000 multifamily homes in nine states.
“Yesterday I spoke with one of the largest landowners in the world, and what he says to everyone is, ‘Live to 25.’ is paying [and] The market is healthy,” he said.
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Rising real estate prices and mortgage rates have made renting the only option for many Americans.
“This is just the perfect storm for the multifamily business,” Carroll said in an interview with Fox Business in the summer of 2022.
If you’re interested in investing in multifamily real estate, there are two ways to get involved.
Investing in residential REITs
Investing in a residential real estate investment trust (REIT) profit from the real estate market No need to buy real estate and manage tenants.
REIT is a listed company People who own income-generating real estate such as apartment buildings, shopping centers, and office towers. They collect rent from tenants and pass that rent on to shareholders in the form of regular dividends.
Here are two compound REITs you should check out.
Camden Property Trust (NYSE: CPT) owns, manages, develops and acquires multifamily residential communities. As of March 31, the company owns and operates 172 properties across the United States, including 58,702 multifamily units.
With a market capitalization of just under $12 billion, Camden has a diversified asset portfolio focused on high-growth markets (in terms of jobs, population and migration).
Another residential REIT worth considering is Mid-America Apartment Communities (NYSE: MAA), which builds its portfolio around the high-growth Sunbelt region of the United States.
As of December 31, MAA has ownership of 101,986 multifamily homes, including homes in areas under development, across 16 states and the District of Columbia.
Use an online investment platform
Until recently, only the ultra-wealthy with millions of dollars in spending could afford to invest in first class commercial real estate.
But with the new online investment platform, opened up opportunities To general individual investors.
Many platforms employ a crowdsourcing model, allowing you to join thousands of members with similar interests. In this case, it’s multifamily housing and aims to increase profits and generate passive income.
These easy-to-use platforms (often backed by a team of experts to help you build the ideal portfolio) allow you to: Browse hand-picked deals and participate in funds Invest in a diversified real estate portfolio that maximizes returns while keeping fees low.
If you’re interested in investing in commercial real estate, here’s how to find the best option for your needs. answer a few simple questions Use Moneywise’s investment search tool.
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This article is for information only and should not be construed as advice. It is provided without warranty of any kind.