Real Estate Fundamentals in “Great Shape,” Says Analyst

Chris Lucas, a REIT analyst and senior managing director at Capital One, joined REIT.com for a video interview at REITWorld 2015: NAREIT’s Annual Convention for All Things REIT at the Wynn Las Vegas.

Real estate fundamentals are in “great shape,” according to Lucas: New development is under control, and demand remains fairly consistent across all the property types.

“We’re optimistic about where things are. Obviously there are selected markets where there may be some imbalances, but the bottom line is that things are pretty good,” Lucas said.

Meanwhile, Lucas noted that the gap between public and private real estate valuations reflects an overreaction to fears about interest rate risk. “That relation between public and private market pricing is likely to continue to bounce around,” he said. The gap in pricing will likely narrow heading into 2016, according to Lucas.

Turning to property types, Lucas emphasized that investors are looking for opportunities on a company-by-company basis, rather than for a sector as a whole. The exception would be for specialty areas, which are more unique in terms of their maturity as an asset class, he added.

“The traditional real estate groups are pretty much set. It’s really a function of where management teams are and where they view their opportunities,” Lucas said.