Specialist
Former director at Cushman & Wakefield Debenham Tie Leung Ltd
Agenda
- Current operating environment for office real estate in the US Southwest, highlighting recent trends in occupancy and lease rates
- Impact of evolving labour dynamics across the region
- Regional development trends and expectations, highlighting relative performance of other CRE (commercial real estate) asset classes
- Outlook for US Southwest office sector performance for 2023 and beyond
Questions
1.
Could you outline the current state of the commercial real estate market in the US Southwest today, beginning with how you operationally define the Southwest?
2.
How do you think this broader macro-economic environment – including the expectation for higher and more consistent interest rate increases, current labour statistics and persistent inflation, as with recent CPI data – is influencing the core supply demand trends for Southwest office properties in the US?
3.
How do you relate the impact from recent macroeconomic developments to real estate players' operating performance and strategies, more broadly than within specific asset performance? How are developers and brokers reacting and adapting to this new environment, specifically in the US Southwest?
4.
How has the rest of commercial real estate in the US Southwest performed differently relative to trends in the rest of the country when looking at the specific metrics such as occupancy, lease rates and cap rates, starting with the industrial segment?
5.
How are metrics performing for the multi-family segment in the US Southwest?
6.
You noted that relative to the rest of the US, the office segment in the Southwest is experiencing nodes of resilience. We know that the region has continued to attract both business and individual segments. How has the TAM for commercial real estate, and more specifically office real estate in the US Southwest, evolved over the last few years due to evolving regional labour dynamics? How has the emergence of new industry and the in-flow of more tech firms to the US Southwest impacted the fundamentals of office real estate?
7.
We’re seeing a trend emerging in the rest of the US pertaining to class B and C capital intensive assets – underperforming assets in the office space – to convert those assets for other uses, whether that be multi-family, leisure or something else. Are you seeing that trend unfold in the US Southwest as well for certain towers constructed in the 1980s?
8.
Considering conversion as the last-ditch option for a property owner, how would you assess the sub-lease market for offices in the US Southwest? Has this gained traction as a result of a decrease in primary transactions?
9.
You mentioned that many of the class B and C office buildings are capital intensive. One argument would be to merely continue updating these buildings while incurring high costs. The other argument would be to just tear them down. Where is the US Southwest market at in terms of redevelopment or new developments, considering that the cost of this is significantly higher when it comes to financing these projects? What are you seeing occur more right now, and what might investors be able to contribute?
