“For multifamily, one investment theme is to look to the post-housing bust markets. They were slow to recover economically and demographically, but this also held back development. Now they are growing robustly, but have tame supply pipelines so the outlook for fundamentals is good.
Gateway cities, particularly New York and San Francisco, have a good deal of development coming on-line and are going through digestion issues.But investors with long-term capital may want to take advantage of any near-term dislocations in these markets.
For office investment, head west. The non-Bay Area markets on the West Coast are ‘Goldilocks markets’—they have healthy economies and good demand, but not too much supply.
In retail, ‘demographics is destiny.’ We are seeing better opportunity in the Southeast, Southwest and West than in the North and Northeast because the population is growing faster there, helping to offset the multiple headwinds brick-and-mortar retailers are facing.
The Las Vegas hospitality segment looks good now because travel is up, but the long workout from the over-building of the last cycle and the sharp drop in visitors during the Great Recession has constrained development. Miami, New York City, the Bay Area and Seattle are dealing with excess hotel supply situations, as a substantial number of rooms are coming on-line. These are also the markets seeing more competitive threat from Airbnb. They are also more vulnerable to slowing foreign travel to the U.S., owing to the strong dollar, weak economies abroad and declines in bookings since the election because the U.S. is perceived as less welcoming.”