Winners & Losers: Which CRE Asset Classes Will Dominate in 2025? | Investors Round Table
In this episode of the Investors Round Table, we’re sharing our thoughts on the best and worst commercial real estate assets to buy in 2025. With market shifts, economic headwinds, and evolving investor sentiment, some sectors are thriving while others are falling behind. Logan, Matt, and I will analyze each major asset class, discussing the key drivers behind their performance and where investors should focus their attention.
Logan Freeman, with over 6 years of dynamic real estate experience, has executed over $300M in acquisitions for his firm, FTW Investments and as the head of acquisitions for a prior investment fund. Logan is also the managing broker at XchangeCRE, a boutique commercial real estate brokerage firm specializing in 1031 transactions. Leveraging his unique blend of people skills and transactional expertise, Logan is a driving force in acquisitions, capital raising, and investor relations, and serves as a voting member of the firm's investment committee. ➡ Contact info: 573-694-9669 www.ftwinvestmentsllc.com
Matt is real estate investor and attorney residing in the Nashville, Tennessee area. He lives with his wife, Taylor, and two boys, Ashton (4) and Julian (6 months). Matt has more than $25M of assets under management consisting of 280 multifamily units and 25,000 square feet of office in Tennessee. Matt is the owner of Anderson Legal, a law firm focusing on real estate and construction in Tennessee. He also is an owner of Foundation Title and Cloud Realty. Matt’s representation of hundreds of real estate investors, developers, professionals and contractors in real estate litigation and closings has provided him with a unique perspective and background.
Get commercial real estate coaching, courses, and community to jumpstart your investment journey over at CRE Central: www.crecentral.com
Key Takeaways:
Industrial real estate remains resilient, with low vacancy rates, but older buildings may need upgrades to meet modern standards.
The multifamily market is bifurcating, with Class A urban properties seeing more challenges, while Class B and workforce housing have stronger fundamentals in certain areas.
The office market has structurally changed, with high vacancy rates, but there are pockets of resilience in medical office, Class A trophy spaces, and suburban mixed-use developments.
In retail, grocery-anchored centers and experiential retail are performing well, while malls and big box retail continue to struggle, especially in weaker markets.
Potential opportunities exist in distressed office, hospitality with expiring CMBS loans, retail repositioning, and affordable office/multifamily in good secondary markets, but caution is advised to avoid overpaying.
About Your Host:
Tyler Cauble, Founder & President of The Cauble Group, is a commercial real estate broker and investor based in East Nashville. He’s the best selling author of Open for Business: The Insider’s Guide to Leasing Commercial Real Estate and has focused his career on serving commercial real estate investors.
Episode Transcript:
Tyler Cauble 0:00
This episode of the commercial real estate investor podcast is brought to you by my cre accelerator mastermind, where you'll get access to my step by step investment blueprint, essentially a library of resources on how to invest in commercial real estate. You'll get connected to a supportive community of other commercial real estate investors that are doing projects just like you. You'll get personalized coaching and feedback from me every step of the way. Go to www dot cre central.com to learn more. Welcome back to the commercial real estate investor podcast. We are back with a live investors roundtable. I was just at the best ever conference 2025 literally just got back from the airport not too long ago, and I was doing a panel discussion moderated by ash Patel. Shout out to Chris hatch and Mike Mangione, who are also on that panel with me. And one of the questions that Ash asked is, you know, what do you think is overrated? What do you think is underrated this year in commercial real estate, and it got me thinking we should do an episode on winners and losers for 2025 because the market has drastically shifted since the last time that we did something like this. And so let's, let's dive into it. We're going to talk industrial, multifamily, retail, office. I mean, we may even get into a little bit of tech hospitality. We'll see how it goes. But guys, I'm going to kick it off with industrial first. This has been the the commercial real estate darling for the last 10 years, right? Is demand shifting? Are there some holes that we're starting to see in the industrial and logistics market, or is it still on top? Logan, I'm gonna, I'm gonna log that one over to you first. What are your thoughts?
Speaker 1 1:43
Yeah, I mean, I think that industrial real estate still remains one of the most resilient asset classes, but we are beginning to see differentiation in performance across the subcategories, right? So, I mean, we start at a national level, industrial vacancy rates are, I think we're sitting at close to 5% as q4 2024 so last year, you know? I mean, that's a that's up from the record low of 3.4% in 2022 but you know, that said, I think there's some key factors like reshoring and supply chain de risking that continue to to to fuel this demand that we are seeing now, you know, the cold storage and last mile distribution, they're seeing double digit rent growth with, I mean, this is wild. This is from CBRE, but cold storage leasing is up 14% year over year. You know, the where we're starting to see a little bit of pullback is some of this big box warehouse absorption. It's slowed slightly. But, you know, Port adjacent markets like Savannah and even Houston, the remaining hot. And then the other thing I would say is, you know, in regards to secondary markets like Kansas City or Indianapolis, they're becoming key beneficiaries. You know, industrial rents are up 8.2% year over year. So I don't think we're at full saturation, but here's, here's what I've been seeing in Kansas City, at least, speculative development is being scrutinized more more closely, and so tenant retention is becoming a key driver of value going forward, just in Kansas City alone. You know, I think we're the second largest sub market that has the largest amount of construction under in the pipeline, and so 11 point 4 million square feet. So, I mean, that's a massive wave of industrial construction, which is reshaping the Kansas City Metro. But it's not spec building. It's it's not the majority of these projects already have tenants lined up before they're breaking ground. So we're seeing a lot of build to suit development, you know, leading the way as as companies seek customized solutions for logistics, manufacturing and distributions. And you know, a big part of that in Kansas City is a couple of really large projects as well. But I own industrial here, and you know, a couple of our investors were kind of asking about, like, look, I mean, are you guys concerned about this? And it's like, you know, all this supply coming online, but three of those projects make up like 60% of that 11 point 4 million square feet, and they're already leased, right so we're seeing a whole lot less of that spec development. One of my favorite, I think, components of industrial right now, is flats and Tyler and I have spoken about this a little bit. But, you know, I'm, I'm out here looking for spaces for a few different businesses, and looking to see where's flex being built, or where, where is it available, and our, I think our sub market vacancy, the one that I was looking at, is 0.7% for flex space. That is wild. So I know we're going to get into opportunities later, but I think that with the onshoring, with manufacturing supply chains, we are going to continue to see a big demand for this 510, 15,000 square foot space that could be demised into smaller spaces, if I'm an investor. Which I am sitting here right now. I'm trying to figure out how to get flex buildings into the earth right now. So anyways, that's my take on industrial I think that the spec development is is down, but, you know, vacancy rates still sitting around 5% nationally. That's a, still a pretty damn strong set, you know, asset class to be invested in,
Tyler Cauble 5:23
yeah. I mean anything at 5% or below, probably a pretty good market there, right? I mean that, well, you know, we, once you get to that level of vacancy, it's basically tenants moving from one building to another. That's what I found. That's like, pretty much all it is, you know, it's not like there's, you know, three spaces are just sit vacant forever. It's 50 spaces that sit vacant for a month.
Speaker 1 5:45
You know, I will say the one thing I've seen in the industrial side is these older buildings, they need to be redone. And you know, I think that buildings that have clearing heights of 1618, 20 feet and have the the accessibility to the highways, but I mean, tenants and businesses are looking for, you know, these, these abilities to to have some sort of eco friendly and or some technology in their buildings, right? Because they're getting pressure from their shareholders to say, we got to adopt AI and we have to have all this, you know, you know, robotics in our manufacturing facilities and these old buildings, they're just not set up for that, right? So we are seeing some higher vacancy in older class and of buildings. So it'll be interesting to see kind of what happens. Do they get re faced? The zoning is what keeps the value there, right? We go back to Ricardo law of economic rent when you're in one. I mean, come on now, bring it to me. You know, you might as well just knock it down or try to figure out how to redo it, because getting in one anywhere in the country, in a good area, is very difficult to do.
Tyler Cauble 6:52
Yeah, Matt, Matt, what are your thoughts on on the industrial outlook? I mean, are there, are there winners and losers within the industrial sector?
Speaker 2 7:01
Yeah. And, you know, I don't have a ton to add. And industrial is not really, you know, my space, typically, I know that there are people still absolutely crushing it in industrial, you know, I have buddies in the southeast who are doing phenomenal on these repositions on industrial, and it just doesn't seem like the demand is slowing. We'll see what's going to happen with the onshoring and the manufacturing. I think that's a big question, but it certainly seems to only indicate that the needs going to go up. You know, at worst, we're going to stay steady. Presumably. I also do think, you know, he touched on briefly, robotics, that's getting very interesting, very quickly. And some of the, some of that with the AI and the robotics is a little bit of a wild card, because we really don't, we don't know what some of this is going to look like in 10 years, maybe even three or five years. And that could get real interesting. You know, what are the, what are the needs of these businesses moving forward? Because they could change dramatically. You know, I'm not, I'm not saying that's something that makes me more cautionary, more cautious for industrial but I do think it's something to keep your eye on. I think it's probably going to be more of how do the needs of the spaces change over time, and does that make some of these older properties more obsolete? Does it cause more opportunities for new development on industrial land overall? I think I'm relatively bullish on the space.
Tyler Cauble 8:27
Yeah, I think so too, guys, we'll do this on every asset class as well. Thumbs up or thumbs down. Just verbally say, What do you think? Matt Logan, either one of you, thumbs up. Thumbs up for Matt. All right, cool. Thumbs up for me, too. I mean, three thumbs up on industrial. I think it's strong. I think, look, it's it's slowing down. But largely what you're starting to see is that the spec building is slowing down. That's really all it is. The people just start building totally vacant buildings. Now, like Logan was alluding to, they're pre leasing, a lot of them, or they're just waiting for a tenant. A lot of that. The construction is still happening. All right, multi family, this was an interesting conversation to the best ever conference, because there's a lot of multi family investors in that room. And look, I know that we're one of the the few honest channels out there about the state of multifamily a lot of multifamily investors and developers are bleeding out of their ears, and have been for the past few years. It was kind of wild seeing some of the data points around just how much was delivered in 2021 I mean, it makes sense, right? Like we had more apartments delivered in 2021 than we have in any single year since 1973 I don't know what the hell is going on in 1973 anyway, two years later, in 1975 we had one of we had the worst multi family market in the country. Vacancy was insane. Rental rates just dropped two. In so, of course, you know, here we are, two plus years later, from one of the from the second largest delivery ever on multifamily, and still not doing well. However, the fundamentals are still kind of there. So Logan, what are your thoughts on multifamily? Look,
Speaker 1 10:14
I think the biggest difference between 1973 and now is you could afford many more people can afford a house in 1973 than they can now, I think that's a huge component to be thinking about. No idea where, you know, interest rates were in 1973 but you know, look, the United States still has a shortfall between, depending on who you ask, two and a half million to 3.8 million housing units. And you know, population growth in some belt markets and other parts of the country still is driving rental demand. I mean, we are absorbing in Kansas City alone, 420 units a month right now, guys, 420 units a month. I mean, the demand is outpacing the supply now that's in Kansas City, because we have not been supplying that many units here in Kansas City for a very long time, but I think the sector is bifurcating, you know, Class A, urban core properties are starting to see, I think, a slowdown and and some rent growth. And you start to see some markets with some, you know, slight concessions to try to get their lease up. You know, I think Class B and even some attainable workforce housing can remain strong in the right areas. There's some decent rent growth at 4.2% in 2024 in that in that Specter. And I'd say, you know, if you think about it, this isn't really multi family, but we do have to talk about build to rent, and that's emerging as a preferred strategy with a lot of different developers and those communities in many areas just going off of John Burns consulting information, or at 96% occupancy rates around the Midwest and the Southeast. And so if I'm a multifamily owner or developer, that's starting to scare me a little bit, because now you got these bill for rent communities that in some areas have been really developed, and those rents are not hitting what they thought they were going to, so they're starting to drop them. And now I can go, drive up, get a garage, and I'm going to build for rent community, right? But I think so from a fundamental standpoint. I do think multi family still has some, some strong tailwinds, but we have rising insurance and property tax costs. We have, we have labor costs going into these, in these, these, these deals, and that's cutting into margins in especially in states like Florida and Texas, right? I think that the most strategic plays this year are going to be, you know, this value add repositioning and under supplied secondary markets where proven rent growth has been there and it's outpacing expense growth. So good luck finding that right now, right? And that's really difficult, you know, to do. So if I'm multifamily investor, you know, I think the fundamentals remain strong, but the mechanism and the structure of how these deals go together was broken in the last three to five years. And I think we're seeing that $600 billion sorry, 600 100 trillion dollars. Sorry, no. 600 billion of real estate loans are coming due this year, and a lot of that could be, you know, distressed multi family deals that were done three to five years ago, right? And they're not hitting where they need, need to go. I think that multi family, unfortunately, is the beneficiary for many different reasons in regards to rent growth and things like that, but they're also the unfortunate beneficiary of when property taxes go up, when insurance costs go up, there's so many economic factors that when the consumer is hit hard, they're starting to bargain cut. You pair that with the largest amount of supply coming online. It shouldn't be a surprise that some areas are in trouble, right? And so I think that you think you compare that to, like industrial, for example, that has all these, you know, tailwinds at its back to try to get, you know, no space available. Businesses are trying to take control of their supply chains. It's a completely different thesis, other than multifamily. But what do we always hear with multifamily investors, everyone needs somewhere to live, right? Yes, until they can't afford it and you have to go somewhere else. Or, guess what? Johnny and Joe just developed a deal right down the street and to get leased up, they're giving concessions. Bye, bye. I'm headed down the street to the next property. So I think that is a challenge for for sure, but, you know, I mean, in regards to the Midwest and the Southeast, I think that many, many operators that at least had a longer term view are still doing pretty good in the sector.
Tyler Cauble 14:30
Yeah, Jay Parsons gave a presentation on just the state of multifamily, and it was interesting to see, I'm sure that there were some markets that were doing fine. They were like above the line. Nashville was like average with every other city in the country in terms of how poorly its multifamily is performing. Markets like Huntsville and Austin were getting rocked. I mean, not only does Austin have you. Know. I mean, both of those markets have have been incredibly popular for multi family. They're seeing some drastically negative rent, like rent declines. I mean, I think Austin was sitting around negative 10 or negative 12% year over year, rent declines, which is kind of nuts, if you think about it, because if you underwrite 2000 bucks and now all of a sudden, you're only getting 1800 it's a pretty big deal for your pro forma, Matt, you've also got a fair amount of experience in the multifamily world. I mean, what's, what's your take?
Speaker 2 15:29
Yeah, I think, I think it's very location dependent in my mind, and then it's class dependent. You know, I would not be wanting to be involved with Class A or close to downtown in primary markets that have seen supply coming online recently, but there's a lot of markets that really doesn't have affordable housing. So I think at the end of the day, it depends on whether you're what arena you're playing in. Are you playing in the affordable arena and in the secondary markets when there's not a ton of supply, or are you competing with all these rent drops and these concessions? I think that's really, to me, that's the difference. Because here's the thing, I mean, there's been a ton of supply that's come online, but if you look at the data going into, you know, about 2027 the supply falls off dramatically. There's not a lot, there's not a lot coming online in a couple years. So from my point of view, you know, this whole ride everybody was going on where they would project, oh, you know, 5% plus maybe sometimes 10% rent growth every year. You know that that crazy trade is gone, that's not that's not happening anymore. But on the other hand, I think it's an opportunity, because we've seen, we're seeing the supply come online right now. We're seeing we're seeing pain, we're seeing concessions. We're seeing pain there. We're seeing people realize that maybe these rate drops may or may not happen and might not save the day. So I think there's some opportunities for people who are able to buy in good markets and hold through this supply shock situation we're going through for a couple years.
Tyler Cauble 17:12
I mean, I'm gonna lob this out to either one of you all, so somebody just take it. But how do you make the numbers work? Like, that's the thing that I've struggled on multifamily with for years like, yes, the demand is there. Yes, we know that tenants, you know, people are always going to need a place to put their head at night. But despite all of that, it seems like the numbers still never really pencil in a way that makes the the that type of investment worth it to me. I mean, what's what's the deal?
Speaker 2 17:40
I mean, my answer that's very simple, which is, you just can't pay the prices that were being paid. That's the reality, and that's just the simple truth of it. And so I think there's going to be opportunities maybe where the prices are just not what they were. They're just going to be lower, and that's just existing is going to sell at a higher cap rate, and that is just what it is, in my opinion.
Tyler Cauble 18:03
Yeah. I think two points on that, yeah, go ahead,
Speaker 1 18:09
yeah. I mean number one, you either dominate small, multi family and markets that other people aren't looking at, and you're able to really add value to those, those properties. So I'm talking 50 and under, because everybody's trying to get something where you can have a manager on site. So that's an opportunity, that's a blue ocean strategy. Or you have massive scale, and I mean massive like, to the tune of the guy I was listening with, you know, Willie Walker, the other day, where they know in their properties, because of heat maps and what what's being used like, to the tune of how many people are going to their workout facility every single day. And then across their portfolio of 25,000 units, they are upgrading those specific areas so they have a product that is actually better than the competition. That's how you win in that business, in my in my opinion, or you develop into a really, really hot market, and then you you sell at a four cap, and you build out a six cap, you know. And I think that that was a lot of people's, you know, MOS, but I think a lot of the developers that I've talked to here recently. You know, there's 6500 units of multifamily under construction right now in Kansas City, and 82% of those projects have some sort of public private partnership. So the only other way to go make that work, really, is to go get some public incentives to get your deal to work. So I mean, one dominate small deals and small markets that other people aren't looking at, because those do win, but they're hard to do to have massive scale or three get get really good at with public incentives and make sure that your your costs can be, you know, offset right by something that you really can't control. But if you negotiate it up front, can be a big piece of. Of leverage for you going forward.
Speaker 2 20:01
Yeah, yeah. And let me throw, let me throw a quick curve on there, something I see is maybe an opportunity, which is in this market. It's portfolios of small multi family, you know, four units and under, I think is very interesting right now, because you're seeing people not being able to get the cap rates they used to be able to get for multi family, and that includes small multi family portfolios. But because of the affordability issues you're seeing, you know, small multi family that comps residentially, doing still very well price wise. So I think there's an opportunity. That's what I'm exploring, is portfolios, a smaller multifamily,
Tyler Cauble 20:41
all right, multifamily, thumbs up. Thumbs down for 25 we got thumbs up from Matt. We've got, we've got the gladiator thumb from Logan. It's definitely a thumbs down for me. I just, I can't wrap my mind around it. I want to love multifamily so bad. I really want to somebody help me out here. All right, office. What do we think is, is office a crisis waiting to happen, or is there some opportunity there? Logan, what are your thoughts?
Speaker 1 21:18
Yeah. I mean, I think the data is showing that office demand has structurally changed. I mean, national office vacancy rates are at 19.2% I mean, that's an all time high, you know, 47% of companies are maintaining a hybrid work model, you know. But I do think there are some pockets of resilience. You got medical office buildings, which is remaining as an end out performer cap rates are holding strong at about six and a six and a half percent, and your tenant retention is around 90% and we can talk about all the reasons why they're additionally you know, Class A trophy office in prime locations is performing with a big flight to quality people. You know, places like Austin and Nashville. Class A absorption actually outpaced supply 2024 I've heard a lot of people talking about how well certain pockets of man is doing, you know, and then I think that there's a there's a shift to some suburban office with mixed use elements. I think that's proving to be more resilient than pure play. Kind of CBD office, as tenants are definitely seeking locations with amenities, because they're trying to get people to come to the office. So I think the key here is that, you know, not all office is created equal. Investors that are targeting, you know, adaptive reuse or high credit medical office are going to be the best position this year. But you know, it's definitely one, I think that everybody can agree on, definitely has some pain that is coming. And I know at $600 billion of of real estate that needs to be refinanced, a big portion of is is office. And we're already seeing big trades with with law losses on on those deals in big markets.
Tyler Cauble 22:55
It's true. Matt, what do you say?
Speaker 2 22:57
I really like office in suburban and secondary markets when there's not a lot of supply. Because I think part of the trend is to, you know, we've seen the work from home trend, and then we got the interesting dynamic where a lot of businesses are going back into the office. And so we're going to have to see how that balances out as far as what is the demand for people to go back to the office. But I think a safer bet is the the affordable office space that's in secondary and suburban markets, because part of that trend is to cut the budget on Office, right? Go a little bit smaller, or go a little bit farther out of town, because maybe you're using the office two days a week, maybe you just don't feel like it's worth the investment anymore. I really like that personally. And then I think the general question around especially Class A and nicer office buildings, is, you know, is the bottom end in these markets where we've seen these dramatic drops, you know, it's across the board, whether you're in Austin or New York or Nashville, and whether you're in a downtown metro or you ride outside of downtown, the drops we've seen are all over the place, and it feels like, I don't know, it doesn't feel like a safe time to buy right now. Still, it still feels like there could be more pain. But I'm keeping my eye on these opportunities because it feels like at some point the bottoms got to be in and so I'm focused on these affordable office spaces, but keeping my eye out for the remainder. Yeah,
Tyler Cauble 24:30
I'm definitely a glutton for pain. I've always loved office and I would love for you all to bring me some office space, if anybody listening is coming across single story office buildings in the Tennessee area, 10,000 square feet or more, under $100 a square foot. Shoot me an email. Office at the cobble group.com I want to take a look at it. I'll probably buy it, and I'll let you represent us. Terry is saying I'm totally seeing everything you guys are talking about Memphis. Also, I. Bet you are. I mean, it's, it's interesting. You know, Memphis is a few years behind in terms of recovery, really, from 2008 compared to every other market, but it still mimics everything that you're seeing across the country. I want to do a deal in Memphis so bad like, that's the one city in Tennessee that I haven't been able to figure anything out in So Terry, if you're coming across stuff there that makes sense, reach out. Let's talk. All right, guys, thumbs up, thumbs down. What do we think on Office? Thumbs up, yeah, from Matt, thumbs up, from Logan, thumbs up from Tyler. I'm sure that that's going to be a controversial take on this podcast, but I think that there's a lot of very interesting opportunities in the office world. And here's the thing, it's on sale. You can refinance out of a bad interest rate. You can't refinance out of a bad purchase price. So if you can get something on sale today, and you're prepared to hold for the longer term, I think you're going to get some crazy I mean, just imagine if you were buying retail 10 years ago, when everybody was trying to walk away from it. Speaking of that, let's get into retail, guys, what are we? What are we? What are we thinking here? I mean, retail is fully recovered. It's shifted. It's a new version of retail, and it has been for a couple of years. So Logan, what are your thoughts? I mean, we're not seeing a lot of big bucks anymore.
Speaker 1 26:17
Yeah. You know, grocery anchored centers are leading the sector with 95% plus occupancy rates and six to 7% year over year rate growth. The other component is, you know, experiential retail is also thriving. So think fitness and entertainment dining. You know, those, those tenants are signing 32% of all new retail leases of 2024 you know, we are actually seeing a decent amount of of power centers kind of making a comeback, you know, I mean, we've got, you think about the discount retailers and off price brands, you know, Dollar General, Five Below, TJ x. And what was the group that just put all their space out there for for lease? Yeah, it was Joanne. Joanne, and Big, Big Lots, right? And you know those big lots, Spot spaces here in Kansas City. I mean, they went so fast, like you you couldn't, you couldn't get everybody wants. So I think that's really interesting. And here's why, location, location, location. They have some of the best real estate location wise, in the cities, and there is value there. So, you know, I think that malls and big box retail are starting to, I mean, are continuing to struggle, especially in weaker markets. But, you know, well positioned community centers with a good tenant mix focus on necessity retail are seeing strong demand, and I'm excited. I'm getting ready to work on potentially representing an owner of about 100,000 square foot retail center in Kansas City. And I'm excited to dive into the numbers and try to figure out if it's something that we feel like we can go sell. So, you know, I think there's in I didn't even talk about neighborhood retail. Neighborhood retail being the darling of the industry. Well, four or five years ago, when I was doing neighborhood retail shopping centers. Ain't nobody want to invest in that. Deal with me. We got them done, and we've got five of them across the city now, but in well located locations. But you know, that's a fantastic asset class, because the supply and demand has just been imbalanced for so long. I agree, there
Tyler Cauble 28:17
just hasn't been a whole lot of it developed, right? And so where else are they going to go? Matt? Matt, what's your take?
Speaker 2 28:24
Well, I mean, I'm a little scared of retail, at least in the short term, and I'm a little scarred. I got a, you know, I had a building under contract about a year ago with the Joanne's as one of the anchor tenants, and I backed out of the deal, mostly because of Joanne's financials and studying, and of course, now they're closing their stores. So I and consumer sentiment is just plummeting recently. There's just some things in the market right now that scare me. And, yeah, I just retail right now scares me a little bit with the idea of these leases coming up and having to find a new tenant for them, but that's just me. I'm also not very experienced in retail, so for me personally, I'm gonna, I'm gonna probably shy away from it. It just seems like the least predictable for me out of the rest of them.
Tyler Cauble 29:16
Why is that? I'd like to unpack that a little bit further, just since it's a contrarian tag.
Speaker 2 29:21
Well, I mean, so for example, office, you know, if the bottom is not in, you know, you're buying at a discount compared to a few years ago, multi family, if you're buying, you're buying at a higher cap rate than you were a few years ago, right? So I feel like all of these things, they're easy to figure out whether the numbers are going to work and whether the price makes sense, and to be able to figure out what the risk of holding long term is. For me, retail is just harder to assess that risk. It's it's harder to really look at some of these retail spaces. For me personally, and you see a Gamestop, and you see Joanne's, and then you've got the. Mom and Pop retail stores, and you've got consumer sentiment going down and interest rates going up. For me, there's just a less predictability on what that's going to look like in five years. That's just my personal take. I can't get comfortable with it personally right now, unless it's a screaming deal.
Tyler Cauble 30:19
Yeah, that's funny. That was actually my opinion. I was the contrarian take on stage, because I love retail. I'm still going to give it a thumbs up. But, you know, I took the contrarian take of, you know, look, if you're, if you're going to get into retail, and you're not doing value add, you're buying retail that is sub 5% vacancy, which means that you're paying an absolute premium for whatever deal that you're getting into, and you're probably at the top, like the chances of it going down from here are way stronger than the chances of it going up, in my opinion. So that's why, you know, if you're going to go and buy retail, it's got to be value add. There has to be some, you know, 20, 30% vacancy. There's got to be some physical or some out parcels that you could sell off, something to that extent. Guys, we're one minute over. Let me get 15 seconds out of both of you. What is the opportunity this year? What's like Logan? Biggest opportunity for you?
Speaker 1 31:13
Yeah, I mean, I think distressed opportunities are emerging in kind of four key areas. You know, what we didn't talk about was any office to residential conversions, but just office in general, I think there's, and we're seeing some some comments here in New York City saying, like, lot more demand for Office. So I think that's, that's one is you got to figure that out. If that's an asset class that that you know something about, there will be opportunities there. We didn't get to hospitality, but there is a ton of hotels with expiring CMBS loans, and that's going to mean that many owners are going to be non discretionary sellers, right? And they're going to be forced to refinance or sell, potentially at a discount, like we talked about, retail repositioning, so some struggling big box properties are being converted into last mile logistic hubs or experiential kind of mixed use projects. And then, you know, older industrial repositioning, like we discussed Class B and C industrial buildings in land constrained markets. They've got a big demand. So as long as you can get them upgraded to the to the components in the businesses there are looking for so I think there's targeted opportunities this year, rather than kind of a broad based win kind of approach. And I think those investors who are really focusing on data driven decisions are going to make make some good ones this year, and there could be some opportunities.
Tyler Cauble 32:35
Matt, what are your thoughts?
Speaker 2 32:37
I really like Office and multi family that's affordable in good markets. I know it's a broad but, you know, I really like
Tyler Cauble 32:47
dub trucks full of gold and,
Speaker 2 32:51
well, I mean, look, it's going to be harder to find, of course, no doubt. But that doesn't mean it's not worth it. I mean, that's always been the kind of stuff we bought. It's that it's definitely out there. I think it's just not the time to get lazy and pay premium prices, is the bottom line. And if you can't find it, don't buy anything. That's my, my point of view.
Tyler Cauble 33:09
That's right, yeah, sift through it to find it. Gentlemen, thanks for joining me. Appreciate you all for tuning in. If you are listening, give us a like, subscribe, leave us a review, let us know in the comments what you want to hear more about, and we'll see you guys in the next one. This
episode of the commercial real estate investor podcast is brought to you by my cre accelerator mastermind, where you'll get access to my step by step investment blueprint, essentially a library of resources on how to invest in commercial real estate, you'll get connected to a supportive community of other commercial real estate investors that are doing projects just like you. You'll get personalized coaching and feedback from me every step of the way. Go to www dot cre central.com to learn more you.
In this episode of the Investors Round Table, we’re sharing our thoughts on the best and worst commercial real estate assets to buy in 2025. With market shifts, economic headwinds, and evolving investor sentiment, some sectors are thriving while others are falling behind. Logan, Matt, and I will analyze each major asset class, discussing the key drivers behind their performance and where investors should focus their attention.