Going by some of the headlines in response to the volatility and uncertainty around the U.S. and global economies, it might seem like a safe assumption that commercial real estate deal activity would take a pause. Yet the industry leaders gathered for the Capital Markets Spotlight panel at Connect Los Angeles 2025 made it clear that they remain quite active, albeit selective.
“Obviously we can open up Bloomberg and see a new headline about something in the world or in the U.S. economy, but when we zoom out and look at the big picture drivers, which is something we do whenever we’re evaluating an investment opportunity, we see a lot of the same things across markets in the U.S. for multifamily,” said Scott McCallum, managing director with Blackstone. “And that is falling supply, resilient demand and operating fundamentals that, if they’re not healthy already, are on a path to recovering and being in a very healthy place in the near to medium term, depending on the location.
“So against that backdrop, I think we remain very bullish and constructive on multifamily as an asset class and as an investment opportunity,” he continued. “And we’ve been pursuing it.”
Asked by moderator Marc Renard, executive vice chairman with Cushman & Wakefield, whether Canyon Partners Real Estate sees debt or equity offering the better risk-adjusted return, CIO Robin Potts replied, “I would say that the balance of risk and return profiles has been toward debt consistently over the past couple of years. It’s very easy to find opportunities where we can put out subordinate debt with significant value cushion, significant cash equity cushion and be earning a low- to mid-teens return profile and have a lot of things go wrong before we would be impaired.”
On the equity side, “to earn that same return profile, you need to be right on your rent growth, you need to be right on your exit cap projection,” she added. “A lot of things have to come together to earn that same return profile. So in equity, we have to pick our spots very carefully. On the debt side, it just consistently feels like a wide margin for error with a good return profile.”
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