Real Estate Investment Strategist Sees Valuations Remaining Flat

Scott Crowe, chief investment strategist at CenterSquare Investment Management, joined for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.

Crowe discussed real estate valuations on the private and public side.

Most investors on the private side, particularly those focused on the core gateway markets, should expect real estate prices to continue to remain flat, Crowe said.

As for the REIT market, price returns have been flat the last two years. That is signaling that the strong returns that have been seen from core real estate “are behind us,” Crowe said.

“The tailwind of cap rate compression is largely over, and now, almost 10 years into the recovery, we have engineered somewhat of a supply response in core gateway markets,” Crowe said. In turn, that is resulting in a “pretty significant” deceleration in net operating income (NOI) growth, he noted.

Turning to property sectors, Crowe highlighted the strong fundamentals of single-family rental, data center and industrial REITs.

Retail real estate, meanwhile, is going through a permanent repricing as an asset class, according to Crowe. That’s already occurred in the REIT space, he noted.

“I think retail is a great non-consensus area to be looking at right now,” Crowe said.

Meanwhile, Crowe also emphasized the importance of focusing on supply at this point in the real estate cycle.