Interviewing on Monday at a large REPE firm in NYC. What markets would you say are hottest right now?
Any asset class/geography. Looking to have an answer prepared for “Where would you invest $100m right now?”
[{"id": "i4lyx0f", "text": "south dakota mobile homes", "replies": [{"id": "i4mgfug", "text": "Badlands submarket is so hot RN", "replies": [], "depth": 2}], "depth": 1}, {"id": "i4lzc07", "text": "No offence but how have you got an interview at a large REPE firm without knowing what the hottest markets are right now? Not hating, just genuinely curious", "replies": [{"id": "i4lzxg0", "text": "I\u2019ve done my own research and have several defensible arguments. Just wanted outside/additional perspective. Also an entry level position out of undergrad.", "replies": [{"id": "i4m1j6t", "text": "Ah fair enough, thanks. Well here\u2019s my take - logistics everywhere is flying. Multi family and build to rent is also doing well depending where you are. Data centres are also flying in certain locations with good access to power/infrastructure. Life sciences is booming (in the UK at least. I know Boston is hot for it in the US). \n\nIf you want a hot take, and this may just be relevant to the UK, I reckon retail could be in for a big turn around soon as ERVs bottom out and PE becomes more willing to lend again (and banks may follow), freeing up liquidity and allowing leverage to gear up some cash-on-cash returns as they are trading at high yields rn\n\nHope that helps? Best of luck", "replies": [{"id": "i4mvsmg", "text": "San Diego, LA and Dallas are all growing for bio life science real estate as well.", "replies": [], "depth": 4}, {"id": "i4mwzfh", "text": "Agreed re: retail, there\u2019s already been a shift in capital allocation towards it and other higher yielding asset classes due to the current rising rate environment compressing yields in multifamily and industrial, effectively reducing their appeal to institutional investors.", "replies": [{"id": "i4ohfqp", "text": "I second Retail in the UK. Some of the major REITs are backing the sector and investing big on super prime shopping centres. As noted above, some have called the bottom of the market and forecast ERV and Capital growth (a few shopping centres have transacted recently. The investment market was essentially non existent over the last 2 years). \n\nThis strategy is underpinned by the \u201cflight to prime\u201d which recognises that retail is consolidating at the detriment of secondary, tertiary and (some) high street retail but to the benefit of well positioned primary schemes. Retails parks have shown resilience over Covid too as their drive-to nature and open air shopping kept footfall up when consumer confidence was most damaged. With this being said, retail still has major structural challenges and still carries a higher level of risk as a result of these.", "replies": [{"id": "i51sd11", "text": "What is ERV?", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}, {"id": "i4tn9ic", "text": "Life science might be in trouble. Without cheap money to fund a lot of the speculative tenants, it's a different ball game.", "replies": [], "depth": 4}], "depth": 3}, {"id": "i4n79o5", "text": "I don\u2019t think the question prods whether you know the hot markets right now, so much as it does try to figure out how you think through investments.\n\nI\u2019m not in real estate, but if I\u2019d ask you such a question as an interviewer, it\u2019d be in the aim of getting to know your critical thinking and analysis skills.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i4m5beo", "text": "Sunbelt states - Raleigh, Nashville, etc", "replies": [{"id": "i4mp7z0", "text": "Raleigh, Charlotte, Nashville, Austin.", "replies": [], "depth": 2}], "depth": 1}, {"id": "i4mh5ch", "text": "Multifamily in Austin - SFRs in Phoenix - Industrials in Dallas", "replies": [], "depth": 1}, {"id": "i4mko8z", "text": "Say dogecoin and get hired on the spot, maybe.", "replies": [], "depth": 1}, {"id": "i4mo273", "text": "South Florida market is bonkers atm. Industrial space espcially.", "replies": [], "depth": 1}, {"id": "i4mu70f", "text": "I\u2019m probably behind the curve GA,NC,SC. \n\nAlso mobile home parks.", "replies": [], "depth": 1}, {"id": "i4mub4z", "text": "Logistics in the geographic center of Florida down to Lake Okeechobee. Look at \u201cInland Ports\u201d.\n\nAnother under-recognized land mass is the \u201cOpportunity Zones\u201d in large swaths of rural America that have great transportation networks.\n\nCase in point. $3 mil for a 5 cap in a town of 30,000. This is a closed deal. \n\nhttps://westwoodnetlease.com/properties/290-Sold-OReilly-Immokalee-FL-Florida-Westwood-NetLease-Advisors/", "replies": [{"id": "i4oiqzb", "text": "May as well say Florida", "replies": [{"id": "i4oqz4l", "text": "Fair enough; you can get the higher caps away from the coasts.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i4mzlr9", "text": "Just say Texas. You\u2019re welcome.", "replies": [], "depth": 1}, {"id": "i4nnf1n", "text": "Phoenix is so hot right now. Well always but also for commercial real estate. What asset class would be your focus is a different discussion", "replies": [], "depth": 1}, {"id": "i4o3kld", "text": "**Markets** \\- Austin, Tampa, Raleigh, Nashville, Atlanta, Dallas-Fort Worth, Phoenix, Charlotte   \n**Rationale**: Affordable, warm, business-friendly, lower taxes (no taxes in the case of FL and TX). Measurable Metrics: Strong population growth, median income growth, decreasing crime rates, above-average job growth.   \n**Risks** \\- Excess supply. These are what are considered 'commodity markets' (i.e. low barriers to new supply). The ability of developers to flood the market with new supplies can be catastrophic if demand sudden nosedive. Dallas &amp; Atlanta have the highest construction activity in the market. \n\n**Asset Class**: This could go either way. You can say MF and Industrial because the long-term fundamentals for both asset classes are sound. For industrial, you are seeing e-commerce, onshoring of manufacturing, and the rise of cold-storage buoy demand for industrial space. Certain segments like cold-storage or shallow bay industrial are on an absolute tear right now because of the difficulties with bringing new supply online. For apartments, millennials delaying marriage and families means coupled with rising housing costs and stricter lending standards. The coalescence of these factors means young people will be renting longer. This results in more MF demand. \n\nIf you wanna think outside the big four food groups. Go with mobile home parks. The rationale is that the supply of new homes is actually decreasing due to older parks being demoed in favor of newer developments while demand stays sky high due to the rapid ascent of house prices. Mobile home parks, especially Park-Owned Homes-Parks (where the owner owns all the homes and rents them out) are a cheaper (and superior) housing product for Americans making less than $30k. Cities absolute abhorrence towards these parks make it practically impossible for a new supply to come online - despite the fact that demand for these parks continues to increase as housing becomes increasingly unaffordable for low-income households. \n\nIn the words of Sam Zell \"I don't know of any stock or any company that I'm involved with that has a better prospect than Equity LifeStyle\". \n\nEquity Lifestyle is an MHP REIT. \n\nGood luck with the interview! You got this!", "replies": [], "depth": 1}, {"id": "i4q0rtw", "text": "Literally every market is hot right now.", "replies": [], "depth": 1}, {"id": "i4qnu6r", "text": "I work for a developer in North Jersey. I've seen it a few times already in the comments but warehouses and industrial properties are flaming hot right now due to the rise of e-commerce and need for logistics. We have a land acquisitions manager that has over 30 years of experience in commercial real estate in and around NJ and he says that what is happening with industrial properties right now is \"unprecedented\", \"never seen before\", and \"once in a lifetime\". He has worked through bubbles in residential and commercial office sectors in the past and he is hesitant to even call this a bubble.\n\nWe own a few industrial build-to-suit properties in Central NJ that were under contract starting a little under 2 years ago. Users and investors have reached out and were uninterested because it's a little over an hour from NYC and Newark Terminals. They thought they were overpriced considering the distance to the city. That was about 1 year ago. Since then the value of these properties has risen dramatically and they continue to rise. Some of them are starting to follow up with us too so I guess there weren't too many other options for them.\n\nI am not involved in land acquisitions nor am I a qualified real estate professional but I do the marketing so I am filled in by my coworkers. Hopefully, I don't sound like an idiot.\n\n[This article could possibly be of value as well.](https://www.njspotlightnews.org/2021/07/nj-warehouse-rents-rise-vacancies-fall-voracious-demand-for-space-is-unceasing/)\n\nGood luck in the interview maybe we'll cross paths without knowing it one day!", "replies": [], "depth": 1}]