Earlier this summer, our Chief Investment Officer Ian Formigle had the opportunity to sit down with Dr. Peter Linneman, renowned economist and Founding Principal of Linneman Associates, LLC, a leading real estate advisory firm.
During their conversation, Dr. Linneman explained why:
- He believes we’re in a golden era for multifamily
- How demand was always going to come back faster than supply post-COVID, and why that’s a better option than the alternative
- He expects to see inflation moderate notably by the end of 2022
- Recessions can become a self-fulfilling prophecy if consumers scare themselves into one
We agree with Dr. Linneman’s stance that, “Real estate is not in the business of the next 20 minutes or the next 20 hours or the next 20 days or the next 20 weeks: it’s in the business of the next 20 years”. While rocky, we believe the events of 2022 are moving the commercial real estate market back to a more sustainable outlook.
Investing in commercial real estate entails substantive risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. All investors should consider their individual factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. An investment in a private placement is highly speculative and involves a high degree of risk, including the risk of loss of the entire investment. Private placements are illiquid investments and are intended for investors who do not need a liquid investment.
In addition to more general risks such as high vacancy rates, oversupply of product in the market, and credit quality of tenants, some of the factors that can impact the success or failure of multifamily investments include competition from single-family homes, fluctuations in the average occupancy rate, and increases in mortgage rates that can make debt financing more expensive.
CrowdStreet
Ian is a real estate professional and serial entrepreneur with 24+ years of experience in real estate private equity, startups, and equity and options trading. At CrowdStreet, Ian serves as the key decision-maker for all investments on its Marketplace, totaling over 400 offerings and some $13.7 billion of commercial real estate. Ian is the author of “The Comprehensive Guide to Commercial Real Estate Investing” and he is a contributing author at Forbes.com.
Prior to joining CrowdStreet, Ian was VP of Business Development for ScanlanKemperBard Companies, where he managed the firm’s alternative investment platform and served as a senior acquisitions officer on a team that acquired some $500 million of commercial real estate assets during his tenure. Previously, Ian co-founded and served as CEO of Clarus Property Ventures, a regional real estate private equity firm that focused on multifamily acquisitions. Ian began his career as an equity options market maker and member of the Pacific Exchange. Ian holds a BA in Economics and a BA in Political Science from the University of California at Berkeley and has held numerous securities licenses including Series 7 and 63.
Linneman Associates, LLC
For nearly 45 years, Dr. Peter Linneman's unique blend of scholarly rigor and practical business insight has won him accolades from around the world, including PREA's prestigious Graaskamp Award for Real Estate Research, Wharton's Zell-Lurie Real Estate Center's Lifetime Achievement Award, Realty Stock Magazine's Special Achievement Award, being named "One of the 25 Most Influential People in Real Estate" by Realtor Magazine and inclusion in The New York Observer's "100 Most Powerful People in New York Real Estate".
Peter's long and ongoing business career is highlighted by his roles as Founding Principal of Linneman Associates, LLC, a leading real estate advisory firm, and its affiliates. For more than 40 years, he has advised leading corporations and served on over 20 public and private boards, including serving as Chairman of Rockefeller Center Properties, where he led the successful restructuring and sale of Rockefeller Center in the mid-1990s.
