05/24/2022 | by Sarah Borchersen-Keto

Private equity funds, endowments, and large institutional investors will continue to have a large appetite for commercial real estate given the current inflationary environment and geopolitical uncertainty, says John Sullivan, chair of DLA Piper’s U.S. real estate practice and co-chair of its global real estate practice.

Speaking on the Nareit REIT Report, Sullivan said that asset classes with the ability to reprice themselves due to short lease cycles, such as multifamily and industrial real estate, “are viewed as a good bet because you can raise your rents to… at least keep up with inflation.”

Sullivan highlighted some of the findings of DLA Piper’s 2022 State of the Market survey, including that respondents see logistics, multi-family, life science, and data centers as offering the most attractive risk- adjusted returns for the next 12 months.

Many respondents also pointed to a wall of capital as a factor making them optimistic, with private equity leading the charge, Sullivan noted.

Meanwhile, Sullivan also said that from a capital availability point of view, “the market looks strong and the same is true on the debt side. The debt has gotten more expensive, but you can get the debt.”

Other topics covered in the interview include the state of the office sector, opportunities in the Sun Belt region, mergers and acquisitions, ESG viewpoints, and the future of the urban core.