Panel
Opportunities in Global Real Estate | Global Conference 2025
Milken InstituteCarol Massar, Debra Cafaro, Justin Kennedy, Andrew Smith, David Steinbach, Barry Sternlicht
- The U.S. economy is viewed as currently favorable for capital deployment despite a deficit expected to exceed $2 trillion this year, with a 20-year plan deemed necessary to restore global confidence.
- China is predicted to surpass the U.S. as the world's largest economy while the U.S. faces potential travel revenue losses of 0.3% of GDP (approx. $90 billion) and a significant decline in Chinese student housing demand.
- Global trade is expected to enter an era of deglobalization and friction costs persisting beyond current tariff implementations, with trade deals taking longer than anticipated to finalize.
- Real estate markets are projected to favor a "buy phase" over construction due to supply cutoffs, with industrial land and multi-family stacks expected to drop by 70% and 60% respectively, creating scarcity that drives rent growth for high-quality assets.
- A housing shortage of 4 to 5 million units is anticipated to persist as long as interest rates remain high, while small home builders face labor shortages if deportations reduce the estimated 600,000 to 1.5 million undocumented workers in construction.
- Development in the next 18 months may face a cycle turn, though projects nearing completion risk failure due to supply chain disruptions, cost volatility, and stricter utility providers requiring large upfront payments of approximately $60 million.
- Data center yields are forecast to exit between 5.5% and 6.5%, potentially with recent deals at 7%, while market concentration may leave only ten major players standing due to rising utility costs and regulatory hurdles.
- Investment strategies are shifting toward sectors with secular growth and longevity, such as data, away from core assets, with investors advised to maintain liquidity as opportunities become episodic rather than constant.
- U.S. income assets face negative leverage unless rates drop, contrasting with Europe and Japan where rates are predicted to remain low indefinitely, while foreign capital flows are expected to stay regional rather than global.
- Retail performance is expected to diverge, with community and grocery-anchored centers outperforming power centers, while smaller credit tenants struggle with low margins and an inability to pass on tariff costs.
- Industrial logistics sectors face volatility from shifting supply chains and automation, while large ports dependent on single trade corridors risk disruption from companies unable to absorb import tariffs.
- The U.S. education and capital systems are described as needing urgent fixes to prevent negative national outcomes and improve efficiency, with the U.S. deficit and high rates creating specific headwinds compared to other developed economies.
- Real estate assets are expected to perform well in a climate of slightly higher inflation and interest rates, provided the market moves past the current period of temporary pain and political uncertainty.
- Data center development models are shifting as hyperscalers move from leasing to owning in Europe to protect technology, and travel to the U.S. continues to decline, impacting related economic sectors.
- Commodities face demand challenges without specific branding, and the utility of real estate as a physical gathering place is threatened by virtual alternatives, creating risks to existing cash flows.
- Material expectations for the U.S. include a future where administrations absorb only limited disruption before reversing policies, and the 10-year Treasury yield will heavily depend on foreign reactions to tariffs and the geopolitical climate.