Beth Mattson Teig
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Freelance business writer & editor specializing in commercial real estate, capital markets/investment and franchising.
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Articles by Beth Mattson Teig
Do commercial real estate investors need a fifth major property type?
Real estate portfolios are often built around the four main “food groups” — office, industrial, retail and multifamily. Those traditional methods appear to be falling by the wayside with capital that is expanding into a wider variety of property categories. The world has changed dramatically since the “norms” around real estate investing were created in the 1970s and 1980s. The digital economy has fundamentally changed the demand for real estate.
Advances in Logistics Fuels Industrial Obsolescence
Demand for industrial space has pushed vacancies to historically low levels. But the high tide may no longer be lifting all boats. A surge in new supply along with a growing appetite for more modern facilities is putting more pressure on the sector’s aging building stock. Legacy buildings are having a tougher time keeping up with the changing demands of today’s space users.
Commercial Real Estate Industry on High Alert for Signs of Stress in Multifamily
Potential trouble brewing in a sector that has been viewed as relatively bulletproof multifamily is concerning. But while stress is very much real, industry participants are quick to point out that the overall foundation for multifamily remains strong. “The cracks that we’re seeing are not structural; they’re superficial,” says Vincent DiSalvo, chief investment officer at Kingbird Investment Management, a family office investment firm specializing in multifamily.
ULI Partners with Maastricht University and MIT on Leadership Course for Real Estate
ULI has announced a new collaboration with Maastricht University Center for Real Estate and the Massachusetts Institute of Technology (MIT) Center for Real Estate on the recently launched Global Real Estate Leaders program, a world-class education program aimed at developing the next generation of industry leaders.
Making Mortgages Happen Amid High-Interest Rates
Mortgage lenders are hoping to shake off a slow cycle of originations and get back to the basics of helping customers finance new home purchases. Mortgage production has dropped due to what some lenders are calling a “perfect storm” of higher interest rates, persistently high home prices and limited for-sale inventory.
Regional Banks Battle Liquidity Crunch
Beth Mattson-Teig is a freelance business writer and editor based in Minneapolis. She specializes in commercial real estate and finance topics. Mattson-Teig writes for several national business and industry publications and is the author of numerous white papers.
Opportunistic Funds Take Aim at Looming Commercial Real Estate Distress
The strain of higher interest rates is creating sleepless nights for some commercial real estate owners and operators these days. On the flip side, there is significant capital eagerly lining up to take advantage of market dislocation. Big-name managers such as Blackstone, Brookfield Asset Management, Ares, and Starwood are among those that have completed or are actively raising mega-funds targeting opportunistic strategies.
Ready to Buy Retail Property This Year? Here’s a Close Look at Your Competition
Sperry Equities is a rare investment group that has kept its foot on the gas for the past year or so as both an active buyer and seller. The company’s map for the coming year, however, aligns more with its peers, and that’s because other investors expect to spend money this year, too. Sperry Equities has significant dry powder that it hopes to put to work this year.
Portfolio rebalancing maze: Balancing the denominator effect in real estate investments with today’s market volatility and strategic challenges
The “denominator effect,” which has forced many institutions to pause new investments, appears to be easing. Yet, institutions remain keenly focused on rebalancing existing real estate portfolios, and they are moving cautiously when it comes to deploying fresh capital. The denominator effect moved to the forefront in 2022 following a large decline in the public equity market, resulting in many investors being overallocated to illiquid asset classes such as real estate.
Watch Economic Stats All You Want. Restaurants Are Still Opening
Restaurants have persevered through pandemic shutdowns, high inflation and a shortage of workers, and many operators are coming off a big year of sales. However, advance, seasonally adjusted data from the U.S. Census Bureau shows that January sales from restaurants and drinking establishments increased only 6.3% year over year, slower growth than in any month the previous year. It’s too soon, of course, to say whether that’s a blip or the start of a trend.
Sharing the Load With Participation Loans
Banks that can get comfortable navigating underwriting risks are discovering the benefits of participation loans. Participation loans can be an avenue to both grow and diversify loan portfolios. “For us, there are a lot of pros and not many cons,” says James W. Gore, chief credit officer at $500 million-asset Lumbee Guaranty Bank in Pembroke, N.C., which has a loan-to-deposit ratio below 50%. “Our first priority is the markets that we serve and in the surrounding area,” Gore says.
Emerging Trends: Canada
Higher interest rates and slower economic growth is a common theme that extends to the Canadian market. Real estate development, investment, and transaction activity are expected to remain soft intos 2024. “We’re starting to see cracks that we didn’t see before,” says one interviewee, citing the challenges faced by people feeling the biggest impacts.
Developing Senior Housing for an Aging Hong Kong Populace
The development of senior housing in Hong Kong requires high-level government support and cooperation between the private and public sectors to encourage much-needed new facilities. ULI Asia Pacific and the Chinachem Group launched the Senior Housing: A Business Case for Investment in Hong Kong report at a seminar in Hong Kong’s Central Market on October 19, 2023. Speaking at the event, ULI APAC CEO Alan Beebe said housing attainability was one of the organization’s key mission priorities.
Just a Little Longer: Capital Markets Will Start to Break Free in the Second Half of the Year
The prevailing theme from economists and commercial real estate research teams is that the outlook for the coming year is “better” than the last. Forecasts are calling for positive, albeit slower, economic growth and lower interest rates, and fears of a recession seem to be fading. “I don’t think the Fed has overshot. I think the economy is a lot more resilient than the average person perceives,” said BGO chief economist and head of U.S. research Ryan Severino.
McCoy Symposium Celebrates 30 Years of Insight
Confidential format allows for frank conversations to help real estate leaders understand market trends. High interest rates have frozen the capital markets for commercial real estate. As buyers and sellers argue over the real value of real estate, the volume of deals has shrunk to a fraction of its level before rates began to rise. For 30 years—in good years and bad—the conversations at the ULI/McCoy Symposium on Real Estate Finance have helped industry leaders understand trends in their business.
REITs Find Competitive Edge in Challenging Capital Markets
SHARE Despite optimism that the Federal Reserve may cut rates this year, liquidity remains the topic du jour across the real estate market. Many listed REITs, though, are finding that they have a leg up on their private real estate peers thanks to strong balance sheets, lower leverage, and improving access to both debt and equity markets. The big picture for REIT liquidity remains largely positive. REITs have built strong balance sheets that have seen little deterioration over the past year.
Access to Capital: Solutions for Black Developers to Overcome Funding Challenges
The great divide that prevents Black developers from reaching their full potential is access to capital. They are often competing against generational wealth, expansive real estate development experience, and perception bias, making already-hard-to-secure capital even tougher.
Commercial real estate debt market faces increasing challenges from rising interest rates and maturing loans
The wall of rolling commercial real estate loans is turning up the temperature in a debt market that is already feeling significant heat from higher rates and less liquidity. Loan maturities have pushed to the forefront as a hot topic for good reason. The looming wave is substantial, with near-term maturities that represent more than 40 percent of the $4.4 trillion of outstanding commercial real estate (CRE) mortgages.
Investors Fueling Growth in Alternative Property Sectors
Commercial real estate investors are hitting refresh on stodgy investment strategies and sending more capital flowing into alternative property sectors. ULI’s 2024 Emerging Trends report highlights the “portfolio pivot” underway, with shifts in both property and financial markets that are upending long-established norms of how commercial real estate portfolios should be constructed.
Investors Fueling Growth in Alternative Property Sectors
Commercial real estate investors are hitting refresh on stodgy investment strategies and sending more capital flowing into alternative property sectors. ULI’s 2024 Emerging Trends report highlights the “portfolio pivot” underway, with shifts in both property and financial markets that are upending long-established norms of how commercial real estate portfolios should be constructed.
Emerging Trends: Recalibrating Expectations for the Era ahead in Commercial Real Estate
Real estate market participants are in the midst of a “Great Reset” when it comes to adjusting views related to pricing, risk, and return expectations in an environment marked by higher interest rates and slower economic growth. The need to align thinking and strategies to fit current market dynamics is one of the key themes in the 2024 Emerging Trends in Real Estate forecast for the United States and Canada.
Emerging Trends: Recalibrating Expectations for the Era Ahead in Commercial Real Estate
Real estate market participants are in the midst of a “Great Reset” when it comes to adjusting views related to pricing, risk, and return expectations in an environment marked by higher interest rates and slower economic growth. The need to align thinking and strategies to fit current market dynamics is one of the key themes in the 2024 Emerging Trends in Real Estate forecast for the United States and Canada.
The Lending Outlook for 2024
Community bank lenders are bracing for a “higher for longer” interest rate environment ahead in 2024. The silver lining? After a period of rate volatility and uncertainty, rates appear to be stabilizing. Although more expensive debt financing has been a tough adjustment for borrowers, banks generally have continued to produce steady levels of loan originations.
Under pressure: The commercial real estate debt market faces increasing challenges from rising interest rates and maturing loans
The wall of rolling commercial real estate (CRE) loans is turning up the temperature in a debt market that is already feeling significant heat from higher rates and less liquidity. Loan maturities have pushed to the forefront as a hot topic for good reason. The looming wave is substantial, with near-term maturities that represent more than 40 percent of the $4.4 trillion of outstanding CRE mortgages.
You’ve Heard Talk of Office-to-Residential Conversions. What About Office-to-Retail?
Retail property has had its reckoning with oversupply, and after decades of apocalyptic narratives, brick-and-mortar retail has emerged, well, in demand. Now it appears to be office’s turn, as post-pandemic hybrid work forces office property owners to reimagine their models. Arlington, Virginia, just outside the District of Columbia, has been such a prized office submarket that Amazon chose it in 2018 for its secondary headquarters.
Banking the Nonprofit Way
From local scout troops to hospitals and housing development organizations, banking nonprofits have turned into big business for many community banks. At Beneficial State Bank in Oakland, Calif., nonprofits account for 33% of the total client portfolio, encompassing nearly 1,000 different groups. “It is really an important vertical for us,” says Mary Edmeades, vice president and client treasury manager at the $1.7 billion-asset community bank.
Water works: Private capital is stepping in to address the substantial global need for investment in water infrastructure
The planet has plenty of water. In fact, more than 70 percent of the Earth’s surface is covered with it. But digging further into the issue of water reveals a global crisis that is generating massive investment opportunities for infrastructure investors. Experts agree the need for investment in water infrastructure globally is at an unprecedented level.
A tale of two offices markets: Can conversions solve the surplus office problem?
This article is the second of a two-part series. Part one appeared in the November issue of the magazine. In Manhattan, the Vanbarton Group is in the process of converting a 24-story office tower at 160 Water St. to a premier apartment building. The new project will add five new floors to create 588 units. Across the country, Hines is transforming the 217,000-square-foot South Temple Tower in Salt Lake City into a 255-unit luxury multifamily tower.
Office Market Braces for Growing Pipeline of Distressed Sales
Many office property owners are heading for the exits amid weaker demand and looming debt maturities, while opportunistic private equity groups are leaning in to capture what could be once-in-a-generation buying opportunities. “This is a moment in time where there is a lot of distress and more distress coming.
8 Ways Community Banks Can Boost Small Business Lending
Small businesses are the backbone of the American economy—but there is nothing “small” about their financial muscle. The more than 33 billion small businesses in the country employ 61.7 million people—nearly half of all private sector employees, according to the Small Business Administration (SBA). Those customers bring significant business for community banks on both sides of the ledger: loan products and deposits.
Bracing for Impact: Loan Maturities Stoke Capital Concerns
Retail property owners holding loans that are set to mature in this higher-interest rate environment are bracing for impact. Borrowers will feel the pain of more expensive capital and tighter credit, and pockets of distress will emerge among weaker assets. The silver lining is that there is still good liquidity in the market and lenders are willing to extend or refinance loans on good retail assets.
Water works: Private capital is stepping in to address the substantial global need for investment in water infrastructure
Experts agree the need for investment in water infrastructure globally is at an unprecedented level. According to the Global Commission on the Economics of Water, up to $400 billion of additional investment per year is needed in low- and middle-income countries in order to achieve universal access to clean drinking water, sanitation and hygiene by 2030.
ULI/PwC Report Calls for “Reset” on Commercial Real Estate Market Trends and Pricing
If you were comparing the year ahead in commercial real estate to an amusement park attraction, it might look more like a carousel than a rollercoaster. There are definitely hurdles and market disruption ahead that could make your head spin. But the pace of change for the latest emerging trends shaping the industry is going to be a slow ride. “Higher and slower for longer” is one of the major trends highlighted in the newly released Emerging Trends in Real Estate® 2024 report.
Real Estate: Space Scarcity Fuels Landlord’s Market
Franchise groups trying to keep expansion plans on track are bumping into challenges that include a competitive real estate market with more limited options and rising costs. High quality retail and restaurant space is continuing to disappear, with shopping center construction starts that are at their lowest level since 2005. As of mid-year, the U.S. retail vacancy rate was averaging 4.2 percent, according to JLL.
Water works: Private capital is stepping in to address the substantial global need for investment in water infrastructure
The planet has plenty of water. In fact, more than 70 percent of the earth’s surface is covered with it. But digging further into the issue of water reveals a global crisis that is generating massive investment opportunities for infrastructure investors. Experts agree the need for investment in water infrastructure globally is at an unprecedented level.
A tale of two office markets
This article is the first of a two-part series. The office sector is facing more than its share of tough challenges in a new era of hybrid work that has altered basic supply and demand fundamentals. The story of surplus office space creating a drag on the office sector appears pretty straightforward. Vacancies have increased as demand has decreased. The national office vacancy rate has climbed into the high teens, which will take years to absorb given the tepid demand and downsizing still under way.
Consumer Demand for Medtail Is Here to Stay, Though Other Facts Affect Its Expansion
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How to Excel in Niche Lending
Go to any city in the country and there’s a good chance you’ll find somebody making beer in their garage dreaming about turning their hobby into a business. Heartland Bank in Whitehall, Ohio, has been helping to make those dreams a reality with its focused craft brewery and distillery financing group. “Most community banks step into something and they think, ‘Wow, this is a really good business.
Where are the opportunities in office investment, given the wide bifurcation between success and distress?
The office sector is facing more than its share of tough challenges in a new era of hybrid work that has altered basic supply and demand fundamentals. The story of surplus office space creating a drag on the office sector appears pretty straightforward. Vacancies have increased as demand has decreased. The national office vacancy rate has climbed into the high teens, which will take years to absorb given the tepid demand and downsizing still under way.
Sticker Shock: Property Owners Battle Rising Insurance Costs
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A tale of two office markets (part 1): Where are the opportunities in office investment, given the wide bifurcation between success and distress?
The office sector is facing more than its share of tough challenges in a new era of hybrid work that has altered basic supply and demand fundamentals. The story of surplus office space creating a drag on the office sector appears pretty straightforward. Vacancies have increased as demand has decreased. The national office vacancy rate has climbed into the high teens, which will take years to absorb given the tepid demand and downsizing still under way.
Generative AI in Community Banking: What's the Risk?
Generative AI has become a popular, easily accessible tool that can write reports, music or even fix computer code. But financial institutions are also dealing with the darker side of generative AI, including more sophisticated cybercrime and employee missteps that may expose confidential information. ChatGPT has become the poster child for generative AI, but there’s a rapidly growing list of user-friendly generative AI tools, including Synthesia for video and Replica for audio formats.
Do the Sales of Two Big Real Estate Loan Portfolios Signal a Thawing Market?
In a transaction market that remains relatively quiet, a few investors made some big moves when it comes to buying distressed commercial real estate debt. In Mid-August, Fortress Investment Group acquired roughly $1 billion in office loans from Capital One that are backed predominantly by assets in New York City. And in June, Kennedy-Wilson Holdings acquired PacWest Bancorp’s construction loan portfolio and lending platform for $5.7 billion.
The EB-5 Investment Program Continues to Regain Momentum
The EB-5 immigration investment program has been on a bumpy path to recovery after Congress reinstated the program nearly 18 months ago. But industry participants are optimistic about the runway ahead due to pent-up demand from international investors along with developers that are searching for alternative financing sources in a more capital-constrained market. EB-5 is an incentive program for foreign investment into the U.S. that trades green cards for capital.
Should You Talk to Customers about your Community Bank's Finances?
Like other community banks, Grand Rapids State Bank in Grand Rapids, Minn., has nothing in common with Silicon Valley Bank (SVB) or Signature Bank. But in the aftermath of the megabanks’ failure, that didn’t stop the community bank’s leaders from putting a plan together for talking about the bank’s financial health if customers had questions.
With a Challenged Real Estate Investment Climate, Ground Leases Attract a Bigger Following
Ground leases are stepping out of the shadows of commercial real estate buildings and commanding more attention from both buyers and sellers looking for alternative funding sources. Ground leases run the gamut from the land underneath fast food restaurants to parcels beneath hotels, apartments, industrial warehouses and office towers.
Capital Markets Update: Fittest Sponsors Still Closing Deals
The old saying about things getting worse before they get better could be in the cards for commercial real estate. The industry is feeling mounting pressure from higher rates and tighter liquidity—with more pain ahead. “If we’re peeling the onion back to see what’s going to make us cry in the second half of the year—it’s all capital,” says KC Conway, MAI, CRE, CCIM, real estate economist at Red Shoe Economics.
Multifamily, Industrial Remain Top Choices for Institutional Investors
Results from the 2023 WMRE Institutional Investor Survey (brought to you by AppFolio) show that multifamily and industrial remain the favored property types. Respondents said institutions are most likely to prefer investing in multifamily (60%) and industrial (50%), followed by life sciences/biotech (43%), medical office (38%) and self storage (38%). Those sectors that were viewed least favorably included retail (19%), hotel (18%) and office (17%).
HNW Investors Continue to Favor Multifamily, Industrial Real Estate Segments
High net worth investors (HNWI) still hold a preference for multifamily and industrial assets when investing in commercial real estate according to the latest edition of research surveying readers of WMRE and WealthManagement.com (brought to you by Ashcroft Capital). The annual survey polls both financial advisors and commercial real estate professionals to get their perspectives on HNWI and accredited investor strategies related to commercial real estate.
Real Estate Buyers and Sellers Remain Stuck in a Standoff on Asset Pricing
After a whopping 11 Fed rate hikes, commercial real estate investors are still grappling with the same issue they have been battling for months—pricing uncertainty. And it remains to be seen just how long the divide between buyers and sellers will last. “We’re definitely in a very different environment than we were a year ago,” said Jim Costello, chief economist–Real Assets at MSCI. Interest rates had started to increase but were still relatively low and investors were hungry for yield.
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