WEBVTT 00:00:01.840 --> 00:00:05.440 Speaker 0: Welcome to a special edition of the Weekly Take. 00:00:05.440 --> 00:00:09.440 Speaker 0: Twenty twenty six is still young, but after an eventful first quarter in terms 00:00:09.680 --> 00:00:13.680 Speaker 0: of global current events, it's time to check-in on the state of the economy 00:00:13.680 --> 00:00:17.505 Speaker 0: and update our outlook on commercial real estate. 00:00:17.505 --> 00:00:21.505 Speaker 0: On this weekly Take Extra, we're joined by CBRE's global head of 00:00:21.585 --> 00:00:25.585 Speaker 0: research, doctor Henry Chin, to share up to the moment insights 00:00:26.145 --> 00:00:28.740 Speaker 0: across the business. 00:00:28.740 --> 00:00:30.980 Speaker 0: My good friend, Henry Chin, welcome back to the show. 00:00:30.980 --> 00:00:32.100 Speaker 0: Great to see you. 00:00:32.100 --> 00:00:33.300 Speaker 1: Good to see you, Spencer. 00:00:33.300 --> 00:00:35.620 Speaker 1: It's always good to be back to the show. 00:00:35.620 --> 00:00:38.740 Speaker 0: Always great to have you back, and these are some of our most popular 00:00:38.740 --> 00:00:39.460 Speaker 0: recordings. 00:00:39.460 --> 00:00:41.355 Speaker 0: Let's just start big picture. 00:00:41.355 --> 00:00:43.275 Speaker 0: We're recording this at the end of April. 00:00:43.275 --> 00:00:46.075 Speaker 0: We have a lot of macro noise going on today. 00:00:46.075 --> 00:00:47.675 Speaker 0: Interest rates are up. 00:00:47.675 --> 00:00:50.235 Speaker 0: We're feeling uncertainty from investors. 00:00:50.235 --> 00:00:51.995 Speaker 0: Inflation is staying sticky. 00:00:51.995 --> 00:00:55.440 Speaker 0: Before we get into the individual asset type, just give me the big picture. 00:00:55.440 --> 00:00:59.440 Speaker 1: I have to say, Spencer, global real estate market and the US 00:00:59.520 --> 00:01:03.520 Speaker 1: commercial real estate market continue to perform very, very well 00:01:04.000 --> 00:01:07.120 Speaker 1: in the first quarter of twenty twenty six. 00:01:07.120 --> 00:01:11.120 Speaker 1: It's not only coming from the investor capital market side that these in 00:01:11.325 --> 00:01:13.405 Speaker 1: performance has been so strong. 00:01:13.405 --> 00:01:17.405 Speaker 1: And that even when we are looking at global macro pictures, 00:01:17.565 --> 00:01:21.565 Speaker 1: yes, we do see some slowdown, revising down a bit, but nevertheless, 00:01:21.965 --> 00:01:25.460 Speaker 1: I think the recovery continue in our space. 00:01:25.460 --> 00:01:26.740 Speaker 0: Well, that's great to hear, Henry. 00:01:26.740 --> 00:01:30.260 Speaker 0: The way that I try to frame it is that you have the news 00:01:30.260 --> 00:01:34.020 Speaker 0: of the day on one hand, and then you have what I call the 00:01:34.020 --> 00:01:35.300 Speaker 0: math on the other. 00:01:35.300 --> 00:01:38.580 Speaker 0: And I think what you're saying here is, Henry, is that notwithstanding the fact 00:01:38.580 --> 00:01:42.405 Speaker 0: there's some scary news out there, we talked about inflation, interest rates, obviously, the 00:01:42.405 --> 00:01:46.405 Speaker 0: wars, the math as measured by fundamentals 00:01:46.725 --> 00:01:50.725 Speaker 0: in terms of people leasing, people selling, those are still going strong. 00:01:50.805 --> 00:01:51.605 Speaker 0: Fair statement? 00:01:51.605 --> 00:01:52.565 Speaker 1: That's a fair statement. 00:01:52.565 --> 00:01:54.810 Speaker 1: Real estate is all about demand and supply. 00:01:54.810 --> 00:01:55.210 Speaker 1: Right? 00:01:55.210 --> 00:01:59.210 Speaker 1: So therefore, we look at a fact, as you say, the scientific methods. 00:01:59.530 --> 00:02:02.010 Speaker 1: Real estate still doing really good. 00:02:02.010 --> 00:02:04.330 Speaker 1: This asset class is really resilient. 00:02:04.330 --> 00:02:07.370 Speaker 0: A couple of the stars of the show of real estate in the last 00:02:07.370 --> 00:02:10.895 Speaker 0: couple of years, of course, have been industrial and multifamily. 00:02:10.895 --> 00:02:11.615 Speaker 1: Mhmm. 00:02:11.615 --> 00:02:15.615 Speaker 0: But we have seen a little bit of softness in the last few quarters 00:02:15.855 --> 00:02:16.895 Speaker 0: in these sectors. 00:02:16.895 --> 00:02:18.255 Speaker 0: What are we seeing today? 00:02:18.255 --> 00:02:19.215 Speaker 1: Industrial. 00:02:19.215 --> 00:02:23.215 Speaker 1: From the second half of last year, the leasing activity has 00:02:23.295 --> 00:02:27.295 Speaker 1: picked up, and picked up particularly good quality of 00:02:27.520 --> 00:02:30.320 Speaker 1: asset and the mega centers. 00:02:30.320 --> 00:02:34.320 Speaker 1: I think the momentum has continued in first quarter of 00:02:34.320 --> 00:02:35.280 Speaker 1: this year. 00:02:35.280 --> 00:02:39.280 Speaker 1: We see the fourteen percent uptick for the leasing activities 00:02:39.795 --> 00:02:43.795 Speaker 1: for the logistics basis, okay, which is the strongest for the 00:02:43.875 --> 00:02:45.875 Speaker 1: first quarter for a number of years. 00:02:45.875 --> 00:02:49.875 Speaker 1: The second one I want to highlight here, we are upgrading our whole year 00:02:50.115 --> 00:02:54.115 Speaker 1: leasing activities by to to eight percent, which means 00:02:54.570 --> 00:02:58.570 Speaker 1: we are going to see over a billion square footage of leasing 00:02:58.650 --> 00:03:02.650 Speaker 1: transactions in twenty twenty six, which also means twenty 00:03:02.890 --> 00:03:06.625 Speaker 1: twenty six is the strongest leasing activity on record. 00:03:06.625 --> 00:03:09.265 Speaker 1: So, therefore, this is real. 00:03:09.265 --> 00:03:12.385 Speaker 1: I think that industrial leasing is coming back. 00:03:12.385 --> 00:03:16.385 Speaker 1: It's largely driven by three p l and the manufacturing activities. 00:03:16.945 --> 00:03:19.560 Speaker 0: Let's dig into that in two ways, both macro and micro. 00:03:19.560 --> 00:03:19.800 Speaker 0: Mhmm. 00:03:19.800 --> 00:03:22.680 Speaker 0: One, I wanna go back to something you said earlier that we're seeing a 00:03:22.680 --> 00:03:25.240 Speaker 0: disproportionate amount of this leasing in new facilities. 00:03:25.240 --> 00:03:25.560 Speaker 0: Yes. 00:03:25.560 --> 00:03:27.320 Speaker 0: So what's what's happening with the old facilities? 00:03:27.320 --> 00:03:28.600 Speaker 0: That's that's question a. 00:03:28.600 --> 00:03:29.000 Speaker 0: Uh-huh. 00:03:29.000 --> 00:03:33.000 Speaker 0: And question b is, how how real is this manufacturing reshoring, and 00:03:33.000 --> 00:03:34.895 Speaker 0: how much is it driving industrial demand? 00:03:34.895 --> 00:03:35.695 Speaker 1: It's very interesting. 00:03:35.695 --> 00:03:39.695 Speaker 1: I think the flight to quality also happen in the industrial spaces. 00:03:40.015 --> 00:03:44.015 Speaker 1: So all the facilities, the landlords are offering more incentive 00:03:44.495 --> 00:03:46.335 Speaker 1: to keep the occupiers. 00:03:46.335 --> 00:03:47.660 Speaker 1: That's the reality. 00:03:47.660 --> 00:03:51.660 Speaker 1: So flight quality is is happening in this space. 00:03:51.900 --> 00:03:55.900 Speaker 1: For the manufacturing segment, I think we do see first quarter of 00:03:55.980 --> 00:03:59.980 Speaker 1: lease share, the share of leasing is in the lower double 00:04:00.620 --> 00:04:01.580 Speaker 1: digit. 00:04:01.580 --> 00:04:05.580 Speaker 1: Within those manufacturing segments, tech, power, 00:04:06.465 --> 00:04:10.465 Speaker 1: defense are the major, major drivers to take up 00:04:10.545 --> 00:04:11.985 Speaker 1: more leasing spaces. 00:04:11.985 --> 00:04:15.985 Speaker 1: We also did our first occupier survey for industrial spaces 00:04:16.305 --> 00:04:17.825 Speaker 1: here in the US. 00:04:17.825 --> 00:04:21.090 Speaker 1: We can see forty percent of our manufacturers. 00:04:21.090 --> 00:04:23.970 Speaker 1: They are telling us that we're going to expect even more. 00:04:23.970 --> 00:04:27.970 Speaker 1: So therefore, the share of our manufacturing, I think, is going to increase 00:04:28.050 --> 00:04:32.050 Speaker 1: even further because of reshowing, nearshowing is really happening here 00:04:32.130 --> 00:04:33.035 Speaker 1: in the US. 00:04:33.035 --> 00:04:34.235 Speaker 0: I'm glad you said that, Henry. 00:04:34.235 --> 00:04:38.235 Speaker 0: This is not the manufacturing show, but one of the things I say over 00:04:38.235 --> 00:04:42.235 Speaker 0: and over and over again and is that I think our traditional real 00:04:42.315 --> 00:04:46.315 Speaker 0: estate investors should look at not only investing near 00:04:46.630 --> 00:04:50.630 Speaker 0: manufacturing facilities and warehouses and multifamily and other users, but the facilities 00:04:51.030 --> 00:04:51.350 Speaker 0: themselves. 00:04:51.350 --> 00:04:54.710 Speaker 0: And I think we're increasingly seeing that in part because of this huge uptick 00:04:54.710 --> 00:04:55.350 Speaker 0: in demand. 00:04:55.350 --> 00:04:56.230 Speaker 1: Hundred percent agree. 00:04:56.230 --> 00:05:00.230 Speaker 1: And, Spencer, one thing to wrap up the industrial spaces I want to highlight, 00:05:00.325 --> 00:05:04.325 Speaker 1: Los Angeles was a top manufacturing demand 00:05:04.325 --> 00:05:06.805 Speaker 1: in the first quarter of twenty twenty six. 00:05:06.805 --> 00:05:10.805 Speaker 1: If you're thinking about twelve months ago, people talking about the tariff, 00:05:10.965 --> 00:05:12.485 Speaker 1: there's no much of demand. 00:05:12.485 --> 00:05:14.430 Speaker 1: Greater LA had a tough challenges. 00:05:14.430 --> 00:05:17.630 Speaker 1: But look at this a twelve months after, they're at the top of leasing 00:05:17.630 --> 00:05:19.470 Speaker 1: demand for these spaces. 00:05:19.470 --> 00:05:22.430 Speaker 0: Well, I'm pleased to hear that because we heard some negative stories about the 00:05:22.430 --> 00:05:26.430 Speaker 0: Southern California market, particularly the inland empire, which is not LA, but it's close. 00:05:26.430 --> 00:05:27.070 Speaker 0: Mhmm. 00:05:27.070 --> 00:05:28.510 Speaker 0: But I'm glad to see it's turned the corner. 00:05:28.510 --> 00:05:29.635 Speaker 0: And I'm not surprised at all. 00:05:29.635 --> 00:05:32.435 Speaker 0: And I think the reason is is that the supply spigot shut off 00:05:32.435 --> 00:05:32.995 Speaker 1: a little bit. 00:05:32.995 --> 00:05:36.995 Speaker 0: And once the supply spigot shuts off, existing products are gonna get absorbed. 00:05:37.555 --> 00:05:38.195 Speaker 1: Yeah. 00:05:38.195 --> 00:05:39.875 Speaker 1: Supply issue is quite interesting. 00:05:39.875 --> 00:05:43.155 Speaker 1: I think over the past few years, we got tons of a supply coming 00:05:43.155 --> 00:05:45.190 Speaker 1: to the market for logistics spaces. 00:05:45.190 --> 00:05:45.390 Speaker 1: Spaces. 00:05:45.350 --> 00:05:49.350 Speaker 1: But going forward, probably, we are going back to the historical average, 00:05:49.670 --> 00:05:52.790 Speaker 1: and that compared to COVID time, it's only a third. 00:05:52.790 --> 00:05:56.470 Speaker 1: So, therefore, I think the balance of the demand supply is coming to the 00:05:56.470 --> 00:05:57.785 Speaker 1: market before too long. 00:05:57.785 --> 00:06:00.265 Speaker 0: But, Henry, let's talk about multifamily Sure. 00:06:00.265 --> 00:06:01.065 Speaker 0: For just a moment. 00:06:01.065 --> 00:06:01.305 Speaker 0: Yeah. 00:06:01.305 --> 00:06:05.305 Speaker 0: And, we have seen some softness in the multifamily sector, particularly in the southeast 00:06:05.865 --> 00:06:08.265 Speaker 0: and Texas where there was some overbuilding. 00:06:08.265 --> 00:06:12.265 Speaker 0: Notwithstanding that, I'm optimistic that much like we've absorbed the 00:06:12.420 --> 00:06:15.860 Speaker 0: industrial faster than we thought, I think we're gonna absorb the multi faster than 00:06:15.860 --> 00:06:18.420 Speaker 0: we thought because of the population growth. 00:06:18.420 --> 00:06:20.180 Speaker 0: What do you think, Henry? 00:06:20.180 --> 00:06:24.180 Speaker 1: Well, as I said, multifamily is always quite hard to 00:06:24.195 --> 00:06:24.915 Speaker 1: generalize. 00:06:24.915 --> 00:06:28.595 Speaker 1: Clearly, they are divergent in multifamily markets. 00:06:28.595 --> 00:06:30.035 Speaker 1: You're highlighting that part. 00:06:30.035 --> 00:06:34.035 Speaker 1: But if you're thinking about the US as a whole, q one number 00:06:34.195 --> 00:06:37.820 Speaker 1: for rental growth is up by zero point two percent. 00:06:37.820 --> 00:06:38.140 Speaker 1: Okay? 00:06:38.140 --> 00:06:39.900 Speaker 1: Spencer is not a flat. 00:06:39.900 --> 00:06:41.580 Speaker 1: It's a flat, basically. 00:06:41.580 --> 00:06:42.940 Speaker 1: And then there's a divergence. 00:06:42.940 --> 00:06:43.420 Speaker 1: Right? 00:06:43.420 --> 00:06:47.420 Speaker 1: So to my surprise, Bay Area and San Francisco, 00:06:48.220 --> 00:06:52.220 Speaker 1: we are seeing closer to ten percent of rental growth 00:06:52.540 --> 00:06:53.555 Speaker 1: in q one. 00:06:53.555 --> 00:06:56.835 Speaker 0: Well, Henry, I gotta tell you, and I well, this is not the pat 00:06:56.835 --> 00:06:58.595 Speaker 0: myself on the back moment. 00:06:58.595 --> 00:07:02.595 Speaker 0: But on this show, I've said multiple times three years ago that San Francisco 00:07:02.675 --> 00:07:05.800 Speaker 0: was the most undervalued market in the US. 00:07:05.800 --> 00:07:09.800 Speaker 0: And lo and behold, multifamily is killing it there, and the reason is there's 00:07:09.800 --> 00:07:10.760 Speaker 0: no new supply. 00:07:10.760 --> 00:07:11.400 Speaker 1: Exactly. 00:07:11.400 --> 00:07:15.400 Speaker 1: And, also, the fact is San Francisco has regained all 00:07:15.560 --> 00:07:18.635 Speaker 1: the rental losses during COVID as of now. 00:07:18.635 --> 00:07:21.995 Speaker 1: So going forward, if you're a small investors and you you don't know that 00:07:21.995 --> 00:07:25.035 Speaker 1: if they listen to you three years ago, they probably answer, I got this 00:07:25.035 --> 00:07:27.355 Speaker 1: thing, they are going to make a decent profit. 00:07:27.355 --> 00:07:31.355 Speaker 1: And to our surprise, I think the mountain region also rebound 00:07:32.010 --> 00:07:36.010 Speaker 1: around five percent rental gross, which is fascinating to see that. 00:07:36.490 --> 00:07:40.490 Speaker 1: And as you highlight the Southeast Texas area, we do see 00:07:40.490 --> 00:07:44.490 Speaker 1: some rental decline, but the level of decline has slowed, 00:07:44.730 --> 00:07:46.995 Speaker 1: which is again the good sign. 00:07:46.995 --> 00:07:50.995 Speaker 1: When we pivot to the supply pictures, q one supply hit 00:07:51.235 --> 00:07:55.075 Speaker 1: the lowest quarterly deliveries since twenty twenty one. 00:07:55.075 --> 00:07:59.075 Speaker 1: So the situation might happen to multifamily that 00:07:59.230 --> 00:08:01.630 Speaker 1: this asset class might reach the bottom. 00:08:01.630 --> 00:08:05.630 Speaker 1: We are going to see the stronger recovery probably into twenty 00:08:05.630 --> 00:08:06.190 Speaker 1: twenty seven. 00:08:06.190 --> 00:08:10.030 Speaker 1: We still got an overhang supply to go through, but, overall, I think twenty 00:08:10.030 --> 00:08:12.615 Speaker 1: twenty seven, we are looking to see the bottling out. 00:08:12.615 --> 00:08:15.975 Speaker 0: The office sector seems to be getting a lot more interest today. 00:08:15.975 --> 00:08:19.015 Speaker 0: And the office sector, we don't have to go back to where we were 00:08:19.015 --> 00:08:21.255 Speaker 0: three years ago, but we aren't three years ago. 00:08:21.255 --> 00:08:22.215 Speaker 0: We are now. 00:08:22.215 --> 00:08:24.335 Speaker 0: And one of the comments I've made is, you know what the best time 00:08:24.335 --> 00:08:25.575 Speaker 0: to buy office was? 00:08:25.575 --> 00:08:26.135 Speaker 0: Last year. 00:08:26.135 --> 00:08:27.655 Speaker 0: You know what another good time is? 00:08:27.655 --> 00:08:28.350 Speaker 0: This year. 00:08:28.350 --> 00:08:31.070 Speaker 0: You buy the best office in the best located submarkets. 00:08:31.070 --> 00:08:32.990 Speaker 0: You're seeing great demand for new product. 00:08:32.990 --> 00:08:34.270 Speaker 0: What are you seeing, Henry? 00:08:34.270 --> 00:08:36.670 Speaker 1: Hundred hundred percent agree with you, Spencer. 00:08:36.670 --> 00:08:40.670 Speaker 1: You know I am the office board for such a long time, and probably 00:08:40.750 --> 00:08:44.545 Speaker 1: because I do believe a future of office return to work is going to 00:08:44.545 --> 00:08:46.225 Speaker 1: be a new normal for us. 00:08:46.225 --> 00:08:50.225 Speaker 1: And I want to highlight for q one, the office rental 00:08:50.385 --> 00:08:54.385 Speaker 1: growth in the US as a whole is up by two point two 00:08:54.545 --> 00:08:55.440 Speaker 1: percent. 00:08:55.440 --> 00:08:58.000 Speaker 0: Up by two point two percent year over year? 00:08:58.000 --> 00:08:59.040 Speaker 1: Year over year. 00:08:59.040 --> 00:09:02.960 Speaker 1: That means we are returning to the long term average. 00:09:02.960 --> 00:09:06.720 Speaker 1: The long term average is the thirty per thirty years average. 00:09:06.720 --> 00:09:10.425 Speaker 1: And the the second one I want to highlight, this is the strongest rental 00:09:10.425 --> 00:09:13.385 Speaker 1: growth since the q one twenty twenty. 00:09:13.385 --> 00:09:15.865 Speaker 1: So, Spencer, that's a fantastic good news. 00:09:15.865 --> 00:09:19.865 Speaker 1: So really office market has already bottling out, moving into 00:09:19.865 --> 00:09:21.145 Speaker 1: a recovery stories. 00:09:21.145 --> 00:09:25.010 Speaker 0: Well, it sounds like industrial where the new normal is like the old normal. 00:09:25.010 --> 00:09:26.930 Speaker 0: Maybe that'll be the title of today's episode. 00:09:26.930 --> 00:09:27.250 Speaker 1: Yeah. 00:09:27.250 --> 00:09:28.050 Speaker 1: Exactly. 00:09:28.050 --> 00:09:32.050 Speaker 1: And, also, of course, we see that good quality of asset versus 00:09:32.290 --> 00:09:33.810 Speaker 1: a non so good quality. 00:09:33.810 --> 00:09:37.810 Speaker 1: If you look at lots of prime segments, Spencer, the rental growth is 00:09:37.890 --> 00:09:39.845 Speaker 1: closer to five percent. 00:09:39.845 --> 00:09:43.845 Speaker 1: So, therefore, the top end of segment of office market is 00:09:43.925 --> 00:09:47.925 Speaker 1: definitely driving the growth going forward. 00:09:48.005 --> 00:09:52.005 Speaker 1: Every indicators we are seeing is actually the market 00:09:52.245 --> 00:09:53.605 Speaker 1: is continue to recover. 00:09:53.605 --> 00:09:54.885 Speaker 0: Quick comment on retail. 00:09:54.885 --> 00:09:58.885 Speaker 0: We just did a terrific show with Jackson Shea, the CEO of Macerich, 00:09:59.070 --> 00:10:03.070 Speaker 0: talking about how his leasing activity is picking up, how they're transforming 00:10:03.150 --> 00:10:07.070 Speaker 0: some of their malls, doing a little bit more outdoor leasing, changing the tenant 00:10:07.070 --> 00:10:07.390 Speaker 0: mix. 00:10:07.390 --> 00:10:08.350 Speaker 0: What are you seeing in retail? 00:10:08.350 --> 00:10:09.790 Speaker 1: Retail has an interesting stories. 00:10:09.790 --> 00:10:13.790 Speaker 1: I think fundamental remain largely stable, and the asking rent 00:10:14.005 --> 00:10:18.005 Speaker 1: is also going up by two point four percent year over 00:10:18.165 --> 00:10:18.885 Speaker 1: year. 00:10:18.885 --> 00:10:21.925 Speaker 1: I think lack of supply is still going to be a feature for the 00:10:21.925 --> 00:10:23.380 Speaker 1: retail spaces. 00:10:23.380 --> 00:10:27.380 Speaker 1: And we haven't seen much constructions, but new construction is largely concentrated, 00:10:27.860 --> 00:10:30.260 Speaker 1: funny enough, in the Sunbelt market. 00:10:30.260 --> 00:10:34.260 Speaker 1: The strongest deliverables is actually coming in Dallas 00:10:34.980 --> 00:10:36.895 Speaker 1: and Phoenix. 00:10:36.895 --> 00:10:39.775 Speaker 1: I think that is the that's the fundamental side. 00:10:39.775 --> 00:10:43.775 Speaker 1: But when we are looking at retailers' sentiment, I think the retailers 00:10:43.935 --> 00:10:47.935 Speaker 1: become a little bit cautious because their margin has not been expanded. 00:10:48.175 --> 00:10:52.175 Speaker 1: So, therefore, they become very, very selective to choose the the 00:10:52.340 --> 00:10:53.780 Speaker 1: the location they want to operate. 00:10:53.780 --> 00:10:55.380 Speaker 1: They want to open a store. 00:10:55.380 --> 00:10:59.380 Speaker 1: From a consumer point of view, unfortunately, petrol prices 00:10:59.700 --> 00:11:03.700 Speaker 1: are so high, even I am Dallas, so consumer sentiment 00:11:03.780 --> 00:11:07.780 Speaker 1: is a little bit weakening due to the higher inflation and higher oil 00:11:07.905 --> 00:11:08.545 Speaker 1: price. 00:11:08.545 --> 00:11:09.025 Speaker 0: I'm with you. 00:11:09.025 --> 00:11:12.545 Speaker 0: But let's talk about smaller asset classes, the sub asset types. 00:11:12.545 --> 00:11:15.425 Speaker 0: One of the best one is industrial outdoor storage. 00:11:15.425 --> 00:11:18.385 Speaker 0: The asset class that I hesitate to mention, but now dog gone, I'm gonna 00:11:18.385 --> 00:11:22.180 Speaker 0: mention is life sciences, which has gotten hit really, really hard. 00:11:22.180 --> 00:11:24.180 Speaker 0: What do you see in some of these subasset classes? 00:11:24.180 --> 00:11:28.180 Speaker 1: It's very interesting talking about iOS because I was with some investors 00:11:28.820 --> 00:11:32.820 Speaker 1: here in Dallas, you know, two weekend ago, and the people talk about iOS. 00:11:33.165 --> 00:11:37.165 Speaker 1: I think the iOS is definitely emerging as alternative asset classes, 00:11:37.405 --> 00:11:40.045 Speaker 1: giving the re showing, near showing. 00:11:40.045 --> 00:11:42.605 Speaker 1: I think that creates a demand for us. 00:11:42.605 --> 00:11:46.605 Speaker 1: And the second component you highlight for life sciences it's a similar 00:11:46.910 --> 00:11:50.910 Speaker 1: story we heard about offices, you know, about retails 00:11:50.990 --> 00:11:52.190 Speaker 1: a few years ago. 00:11:52.190 --> 00:11:56.190 Speaker 1: I think life sciences has been through the tough patch over the last eighteen 00:11:56.270 --> 00:11:56.830 Speaker 1: months. 00:11:56.830 --> 00:11:59.725 Speaker 1: The market is very, very closer to the bottom. 00:11:59.725 --> 00:12:03.325 Speaker 1: And I have to say, if you are the small investors, pick on the 00:12:03.325 --> 00:12:06.925 Speaker 1: life sciences, now is a good time to to negotiate how to get a 00:12:06.925 --> 00:12:09.325 Speaker 1: big bargain, and the market will recover. 00:12:09.325 --> 00:12:12.610 Speaker 1: Once we recover, it's going to be fast and furious. 00:12:12.610 --> 00:12:14.690 Speaker 0: And I believe it's gonna be in places like La Jolla. 00:12:14.690 --> 00:12:16.130 Speaker 0: It's gonna be in San Francisco. 00:12:16.130 --> 00:12:17.810 Speaker 0: It's gonna be in Cambridge. 00:12:17.810 --> 00:12:21.810 Speaker 0: I think it's also gonna be on or pertinent to large research university campuses. 00:12:22.130 --> 00:12:25.570 Speaker 0: I think there's life sciences is a niche industry, but if you get the 00:12:25.570 --> 00:12:29.570 Speaker 0: right location, you get the right demand drivers, now is an unbelievably 00:12:30.065 --> 00:12:32.305 Speaker 0: great buy for that subsegment. 00:12:32.305 --> 00:12:33.505 Speaker 1: You just nailed it. 00:12:33.505 --> 00:12:37.505 Speaker 1: I think during the COVID time, people every single city, they want 00:12:37.665 --> 00:12:40.225 Speaker 1: to call themselves after life sciences hub. 00:12:40.225 --> 00:12:41.500 Speaker 1: But come on. 00:12:41.500 --> 00:12:43.260 Speaker 1: You're just being realistic. 00:12:43.260 --> 00:12:46.620 Speaker 1: And how many life sciences hub we have in the US? 00:12:46.620 --> 00:12:50.620 Speaker 1: You're talking about San Diego area, Bay Area, probably, otherwise, 00:12:51.020 --> 00:12:51.900 Speaker 1: Boston. 00:12:51.900 --> 00:12:55.900 Speaker 1: All the others might take a longer time to recover, but also major harbor 00:12:56.235 --> 00:12:57.675 Speaker 1: will recover first. 00:12:57.675 --> 00:13:01.515 Speaker 0: Henry, we've been speaking a lot about what investors are thinking, and the news 00:13:01.515 --> 00:13:05.515 Speaker 0: is generally good to very good and, to some degree, getting 00:13:05.595 --> 00:13:09.350 Speaker 0: back to more of a normal environment, a pre COVID type of environment. 00:13:09.350 --> 00:13:11.510 Speaker 0: But we've got a lot of occupiers listening to this. 00:13:11.510 --> 00:13:12.950 Speaker 0: What is their perspective? 00:13:12.950 --> 00:13:14.070 Speaker 0: And let's just keep it simple. 00:13:14.070 --> 00:13:16.310 Speaker 0: Let's do industrial and an office. 00:13:16.310 --> 00:13:17.830 Speaker 0: What are they thinking today? 00:13:17.830 --> 00:13:19.270 Speaker 0: Where is value? 00:13:19.270 --> 00:13:21.830 Speaker 0: What are the types of decisions they should be making? 00:13:21.830 --> 00:13:25.830 Speaker 1: I think number one, flight to quality is across every 00:13:26.165 --> 00:13:27.205 Speaker 1: single segment. 00:13:27.205 --> 00:13:28.485 Speaker 1: Everyone knows about it. 00:13:28.485 --> 00:13:29.285 Speaker 1: Think about that. 00:13:29.285 --> 00:13:31.045 Speaker 1: It's a flight to quality. 00:13:31.045 --> 00:13:35.045 Speaker 1: Number two is a plan for future spaces. 00:13:35.220 --> 00:13:39.220 Speaker 1: I think you need to start thinking about your composition of your labor 00:13:39.540 --> 00:13:43.540 Speaker 1: forces because the AI does have a drastic impact 00:13:43.540 --> 00:13:44.900 Speaker 1: on the way we work. 00:13:44.900 --> 00:13:48.695 Speaker 1: So I think Occupy should be thinking about what's the composition of labor. 00:13:48.695 --> 00:13:52.695 Speaker 1: The third one, I want everyone to know that vacancy rate for prime 00:13:53.095 --> 00:13:56.695 Speaker 1: assets in ideal locations are trending down. 00:13:56.695 --> 00:14:00.695 Speaker 1: So if you put all of those three points together, I think the occupiers 00:14:01.095 --> 00:14:05.095 Speaker 1: should take advantage to sign up the leases for those suitable spaces 00:14:05.760 --> 00:14:09.760 Speaker 1: as soon as possible because they still have the in a window to get 00:14:09.760 --> 00:14:13.200 Speaker 1: a better deal before the market switch to their no favorite site. 00:14:13.200 --> 00:14:17.200 Speaker 0: What are your final thoughts for our listeners for the first quarter of 00:14:17.360 --> 00:14:19.075 Speaker 0: twenty twenty six? 00:14:19.075 --> 00:14:19.275 Speaker 1: Six? 00:14:19.235 --> 00:14:22.995 Speaker 1: Well, I think, Spencer, we've been highlighting throughout the conversation. 00:14:22.995 --> 00:14:26.995 Speaker 1: I think we just try not to be overclouded, 00:14:27.635 --> 00:14:31.635 Speaker 1: and by lots of news headlines because the news headline does have a sensational 00:14:31.955 --> 00:14:34.620 Speaker 1: assumptions when it comes to real estate. 00:14:34.620 --> 00:14:38.620 Speaker 1: Do remember, real estate is a function of demand and supply. 00:14:39.500 --> 00:14:43.500 Speaker 1: Lack of supply will be a feature, and demand, we haven't 00:14:43.660 --> 00:14:47.660 Speaker 1: seen any slowdown based on the pipeline we are seeing, based 00:14:47.740 --> 00:14:49.980 Speaker 1: on the macro forecast we are seeing. 00:14:49.980 --> 00:14:52.675 Speaker 1: So so it's still relatively solid. 00:14:52.675 --> 00:14:56.675 Speaker 1: And and now, also, people looking about the oil prices versus real 00:14:56.675 --> 00:14:57.715 Speaker 1: estate value. 00:14:57.715 --> 00:14:59.635 Speaker 1: Spencer, I want to highlight. 00:14:59.635 --> 00:15:01.315 Speaker 1: We did so many analysis. 00:15:01.315 --> 00:15:05.315 Speaker 1: There are significant correlations between real estate value 00:15:05.315 --> 00:15:07.690 Speaker 1: cap rate and the oil prices. 00:15:07.690 --> 00:15:11.690 Speaker 1: And the the biggest uncertainty we are facing is how long 00:15:11.850 --> 00:15:14.010 Speaker 1: the duration of a conflict. 00:15:14.010 --> 00:15:18.010 Speaker 1: Even we were looking at the the previous geopolitical issue, 00:15:18.090 --> 00:15:22.090 Speaker 1: even the conflict is getting so drastically longer, we're gonna see the 00:15:22.145 --> 00:15:25.745 Speaker 1: dip in a quarter or two maximum before we recover back. 00:15:25.745 --> 00:15:29.345 Speaker 1: And then that's another big thesis that we are subscribing to. 00:15:29.345 --> 00:15:33.345 Speaker 1: So, therefore, we, you know, always thinking about fundamentals, 00:15:33.950 --> 00:15:35.470 Speaker 1: demand, and supply. 00:15:35.470 --> 00:15:38.030 Speaker 1: Let it play out and stick with the math. 00:15:38.030 --> 00:15:40.510 Speaker 1: I think you're going to get a decent returns going forward. 00:15:40.510 --> 00:15:44.270 Speaker 0: Well, on behalf of the Weekly Take, thanks again to you, Henry, to everyone 00:15:44.270 --> 00:15:45.310 Speaker 0: in the audience. 00:15:45.310 --> 00:15:47.825 Speaker 1: Thank you, Spencer, and goodbye, everyone. 00:15:47.825 --> 00:15:50.865 Speaker 0: Henry will return to the show to keep you up to date on the 00:15:50.865 --> 00:15:54.865 Speaker 0: best insights and information, and we'll return with regularly scheduled 00:15:55.025 --> 00:15:56.625 Speaker 0: programming next week. 00:15:56.625 --> 00:16:00.145 Speaker 0: And as always, you can find more on our website, c b r e 00:16:00.145 --> 00:16:02.820 Speaker 0: dot com slash the weekly take. 00:16:02.820 --> 00:16:04.260 Speaker 0: Thanks for listening. 00:16:04.260 --> 00:16:05.860 Speaker 0: I'm Spencer Levy. 00:16:05.860 --> 00:16:06.900 Speaker 0: Be smart. 00:16:06.900 --> 00:16:07.860 Speaker 0: Be safe. 00:16:07.860 --> 00:16:09.860 Speaker 0: Be well.