Turning Fear Into Yield

The fear: Tariffs, geopolitical realignment and restrictive immigration policy are disrupting global trade and labor supply. Some investors fear these headwinds—alongside a logistics construction boom during the pandemic—signal weakening demand and overbuilding risks.

The fundamentals: Demand for modern warehouses remains robust. “Occupiers still need to make decisions on space needs,” said Diann Hsueh and are continuing to prioritize real estate that enables automation and supply chain resilience. “Supply chain managers have one job—guarantee supply. They are choosing buildings that can deliver that reliability.”

Growth catalysts: Portfolio data backs this view. CBRE IM’s 64 million square foot logistics portfolio, with nearly 200 occupiers, is seeing strong renewal and rent reversion. “Year-to-date, we’re marking rents to market, amounting to a 42% increase over prior leases,” added Hsueh. Touring and leasing activity, which briefly paused around Liberation Day, have since rebounded.

Shane Taylor added that worst-case trade scenarios are often overstated: “We modeled a 20% drop in foreign imports and found port logistics impacts were less severe than expected.” Meanwhile, construction starts are falling, helping mitigate oversupply risk. With capital retreating and automation accelerating, CBRE IM sees a window to secure high-quality logistics assets at more attractive entry points.

The fear: Labor shortages, lower immigration and high construction costs have raised doubts about whether U.S. housing can meet demand or if affordability constraints, exacerbated by persistent interest rate pressure, will cap growth. Some investors fear housing demand could falter or fragment.

The fundamentals: The affordability gap has become a powerful structural driver in U.S. real estate. “SFR will generate the highest rent growth of any property type over the next 12 months,” said Jon San Antonio. Homeownership now costs roughly 50% more than renting, while the U.S. remains undersupplied by an estimated three million units. Ben Green added: “Even with lower immigration, we believe national housing demand will remain resilient.” CBRE IM’s portfolio reflects this trend, with leasing traffic up 7% year-over-year.

Growth catalysts: Operating platforms with CAPEX capacity are positioned to unlock value. “We’re seeing underinvestment by owners who are servicing debt rather than improving assets,” said San Antonio. “That creates NOI upside for groups who can execute.” Julie Ingersoll noted that CBRE IM is also leaning into residential adjacencies—such as student housing and manufactured homes—to deliver income durability across market cycles.

Ben Green highlighted additional upside from distressed sellers: “We’re acquiring below replacement cost, with in-place demand. The fundamentals are already working.” In a capital-constrained market, the blend of downside protection and growth potential is key.

The fear: Long-standing fears about e-commerce and post-pandemic spending habits still weigh on sentiment—especially for suburban and lifestyle retail. Some investors still have a lingering perception that physical retail is obsolete or structurally impaired.

The fundamentals: Panelists emphasized that the current dislocation created precisely the type of mispricing long-term investors should seek. “Retail has weathered the storm,” said Jon San Antonio, citing strong tenant health and evolving foot traffic patterns. Limited new supply has created a meaningful landlord advantage. Diann Hsueh noted that retail square footage per capita is at a 20-year low and those assets that remain are increasingly dominant—“the fittest have survived.”

Growth catalysts: The survivors are showing real pricing power. Years of underpricing—driven by a long-standing tenant–landlord imbalance—are now giving landlords room to reprice as retailers recommit to physical stores. “In our retail portfolio, we are seeing consistent leasing momentum,” said Jon San Antonio. “The last three leases we signed had 30%, 10% and 7% uplifts. Fundamentals are strong and gives us the ability to reprice.”

Julie Ingersoll sees similar patterns in lifestyle centers: “A lot of these assets have been remerchandised post-COVID. Investors are scared, but we see low-hanging fruit in rent reversion. We’re not even underwriting growth—just marking to market.” CBRE IM is also targeting necessity-based retail in suburban markets. “Such retail is under the radar for institutions, but they have strong foot traffic, durable tenants and real pricing power,” Ingersoll added.

The fear: Institutional investors remain cautious on San Francisco after tech layoffs, slow return-to-office trends and governance challenges—raising fears of persistent demand loss in high-cost cities, such as San Francisco.

The fundamentals: The panelists believe this has led to deep mispricing. “San Francisco will lead the nation in apartment growth in 2025,” predicted Ingersoll, citing three tailwinds: AI-led job growth, a pro-housing mayor and record-low new supply.

Growth catalysts: Ingersoll framed these trends as early-stage signals already visible in CBRE IM’s portfolio. “We are seeing early momentum in return-to-office behavior, especially among tech sectors tied to AI,” she said. “This isn’t just cyclical—it’s a secular reset.” Apartment leasing interest in select Bay Area assets is rising, particularly among firms with AI-linked job growth.

She also described a shift in local governance: “There’s a new mayor. There’s more accountability.” The supply backdrop further sharpens the case. “There are only 600 or 700 new apartment units coming on the market in San Francisco this year,” Ingersoll added. “That’s an extraordinarily low number.”

The fear: Self-storage has fallen out of favor following its pandemic-era boom. Lease rates have declined for two years and many operators have struggled to maintain peak occupancy and pricing. The resulting volatility has driven capital away—especially investors seeking near-term stability.

The fundamentals: Panelists believe this caution has created a mispriced opportunity. “New lease rates have been falling for a couple of years—but we’re now seeing signs of stabilization across our portfolio,” said Julie Ingersoll. With construction sharply curtailed and consumer behavior returning to normal, the market is beginning to reset. The sector’s low CAPEX needs and historically resilient margins make it a strong complement to core income strategies.

Growth catalysts: We are hearing from our CBRE partners that it’s a real buying opportunity—as long as you can underwrite the timing of a recovery,” Ingersoll added. A shrinking supply pipeline is laying the groundwork for a reversion trade—especially in suburban markets where mobility remains strong. CBRE IM expects leasing to rebound as household formation stabilizes and operators regain pricing power. For investors positioned to ride out near-term volatility, the current dislocation offers meaningful upside.