John Sullivan

John Sullivan, chair of U.S. real estate and co-chair of the global real estate practice at DLA Piper, was a guest on the latest episode of the Nareit REIT Report.

Sullivan shared some of the findings from the DLA Piper Global Real Estate State of the Market Survey 2024. He described sentiment among CRE executives today as one of “cautious optimism.”

“I think the message we're getting is that people think the skies are starting to clear a little bit. Nobody is saying that we're there yet, but people are looking at interest rates having stabilized and there's an expectation of some rate cuts,” Sullivan said.

Elsewhere, the DLA Piper survey showed 96% of respondents pointing to challenges in refinancing existing debt, while 74% still see inflation as a concern. Another important theme that emerged in the survey was the need to reimagine office space, Sullivan said.

Sullivan also noted that data centers stood out in the survey as a “darling class.” He pointed out that 53% of respondents identified data centers as an attractive asset class, which is up from 32% in just one year.

Turning to investor interest in geographic markets, Miami came out on top in the survey, Nashville, Tennessee was second, and Austin, Texas was third. At the same time, the survey showed an uptick in interest in the traditional gateway cities of New York, Chicago, Los Angeles, and San Francisco.

“I think the prices in some of these (traditional gateway) cities are getting to the point where people are taking a second look and saying, well, at that basis I'm willing to make a bet… particularly if you have a reasonably long term time horizon,” Sullivan said.