2026-Outlook_Real-Estate_20260102_R03

Robert: [00:00:00] And then this goes back to the drumbeat we all hear every day from all the investors, and we're pushing all of our clients to do it: distributions. Everybody wants distributions and if they don't get distributions, they're not gonna reinvest in these real estate managers.

Nancy: Hello, and thanks for tuning in to Real Estate Capital. I'm your host, Nancy Lashine of Park Madison Partners. Capital is a lifeblood of the real estate industry, but the decisions on where and how it's allocated are driven by people and personalities.

Who are they? What motivates them? What can we learn from their experiences? 

On this show, we introduce you to some of the real estate industry's most influential thought leaders and decision makers, and we talk about what is important to them, how they make critical decisions. Who has influenced them and a lot more.

Today we're doing something a little different than our usual guest lineup. Every year, Park Madison produces an Outlook for the year ahead called [00:01:00] Park Madison Perspectives featuring 10 major themes affecting the commercial real estate industry. We identify the trends and data points that we believe are most relevant to real estate investors today, and then we take our best guess on what they mean for the year ahead.

So for this episode, we've gathered all six members of Park Madison's executive committee to discuss some of our predictions for 2026. Think of it as a look under the hood at the individual views that ultimately come together to shape our house view. And if you enjoy the conversation, we encourage you to read the full 2026 Outlook, which you can access and download for free on our website, parkmadisonpartners.com.

This is such a special treat. I'm so looking forward to today. Welcome to the podcast. We have not one guest, but a team of guests on today's podcast to talk about our 2026 Outlook. Our team of guests are the senior management team at Park Madison Partners, Rob Kohn, Carrie Coulson Naik, Jack Koch, [00:02:00] Brian Di Salvo, and John Sweeney.

Welcome to the podcast. 

Robert: Thank you. Excited to be here. 

Carrie: Happy to be here. 

Jack: Likewise. 

Nancy: So every year we publish an Outlook of the 10 things that we think are likely to happen for the year. And we've been doing that, John, for how many years? 

John: 11. 

Nancy: Count them. So, and at the, and at the end of each year, we grade ourselves as to how we did.

So at the end of this podcast, maybe we'll go back and give ourselves grades for last year. And Carrie, you can lead the grading 'cause I know you're very good at, at that, helping us, lessons learned. But I think let's start with talking about big picture. What are the things that we got really right last year?

What are the things that we got wrong and what were some of the misses? Let's start with what we got right. We had a prediction that data centers weren't going to take a lot of capital and we're going to have a huge demand and we're going [00:03:00] to be a big part of the capital flows for the year. That's pretty obvious.

Anybody wanna comment on that? 

Robert: I don't think it's unsurprising that we had this prediction, but what I do think is really interesting is that we continue to see the interest in data centers and we continue to see more and more investment opportunities.

That said, now we're starting to see and, and read in the headlines that, is there too much capital flowing into the space? 

Nancy: So is this a bubble? Are we in a bubble from a real estate investor standpoint? Is this a data center bubble? 

Robert: Well, I, I don't know. I mean, and then obviously. With our experience at data center space, right?

Every data center's not created equally. You have the hyperscale, you have the colo, and you have the carrier hotel. And I think from a Park Madison standpoint, 2025 has been fantastic because the interest in the two spaces that we're most interested in, carrier hotel and colocation, has really picked up 'cause the hyperscale is what [00:04:00] led the way and led a lot of investors into the data center space. 

But now that we have the hyperscale, that's really taken off the inference and being closer to the eyeballs has become critically important. And that's where the carrier hotels and the colocation comes in.

I don't know if it's a bubble. I don't think it's a bubble. There is caution in the market, given the way that a lot of this is being financed with the different firms all seeming to kind of have a bit of a shell game going on with how they're financing their development. 

Nancy: But when people talk about the bubble, aren't they really talking about hyperscale and  having large credit tenants? And that's very different than the co-location and the networks.

Carrie: I think that's right, and I think the question persists on how will the hyperscale assets, where will the exit be? There hasn't seemed to be much proven exit, whereas I think with co-location and carrier hotels, there's a larger buying universe. [00:05:00] 

John: I think you have to separate the hyperscalers and their business from the data center real estate piece of it.

There's obviously the leasing and tenant credit tie in from the hyperscalers, but if you look at just the supply demand dynamics of the real estate, we can't build these things fast enough. Data center vacancy is basically zero. They're virtually all pre-leased before they're developed, and I don't think there's anyone who would argue that we're going to need fewer data centers in the future.

We're definitely gonna need a lot more. 

Nancy: Any other thoughts about what we got right? I mean, some of the other predictions were, office will be bottoming, retail will be attracting capital flows. Any thoughts about those things?

Carrie: I think office is, we've seen it bottom. I think there have been 40%, through Q3, 40% more trades year over year with discounts as much as 97% on some office trades.

So I think it's becoming more topical, whereas it was for better or worse, a four letter word for the last five years. 

Jack: I totally agree with Carrie. I think the question is, is it still a story of haves and have nots? [00:06:00] Across the country I think there are definitely pockets where we've definitely seen the bottom and now the increase in values to some degree.

For example, we're sitting here in midtown Manhattan where you've seen vacancy come down dramatically just within the last year, and demand continues to be extremely high, especially in the Plaza District, around Park Avenue. However, if you move a block or two east or west, that demand picture looks pretty different. In a mid-block building, for example, I still think that's a pretty tough story. 

That said, there are certainly opportunities, particularly here in the city, within the space and as it pertains to distress and dislocation, where you can get high quality products really at a very low basis. 

John: I think my biggest surprise with office is how quickly the supply destruction has occurred.

We talked about office to residential conversions and how those could come and help remove some of the antiquated older buildings off the market. There were a lot of studies about the [00:07:00] difficulties of those conversions given the size of the floor plates, having enough windows, just not really efficient layouts, but you've really seen developers figure that out, especially some of the older class B, class C space that is truly obsolete.

Last year I think there was close to 40 million square feet of office removed through conversions or demolitions, and it looks like this year's gonna be pretty much on par with that, so that supply destruction is really helping the occupancy picture with office and helping the market find a bottom, perhaps faster than most folks anticipated.

Nancy: Yeah. One of the things that surprised me, and we had Gensler on the podcast was just how smart AI can be and going through, literally, they took, they created a program where they took the floor plates of every office building in New York City and figured out what were right for conversions. It's extremely efficient, certainly a time saver.

As I went back and looked at the 2025 Outlook, [00:08:00] I thought one of the biggest misses was that we underestimated the influence of the office of the president. If we think about what happened this year with respect to political pressure, to cut rates, tariffs, and, I mean,  from a personal interest level, the complete reversal of DEI, for example, it's hard to imagine that was only a year ago. And I think that's probably, sometimes when you think about predicting things, that to me is probably the biggest miss in terms of what we weren't thinking about. And that's hard to blame us. It was very hard to predict this, but we didn't get that right. 

John: There was a lot regarding politics that we thought might happen that we just didn't talk about because why do that to ourselves? Yes, I agree. We didn't think the Fed was gonna cut rates as much as they have. 

Jack: So what's the question there? And what has the impact been to real estate and to our business? I think there's a lot of foreign investors now [00:09:00]  with concern about investing in the United States.

Historically, it's been a very safe and a very stable and predictable environment, and now it feels like things can shift in an instant. I think that's definitely given certain investors some pause in particular as it pertains to foreign investors. 

Robert: And I would say for the first time in my career, and I've been doing this since 2004.

There's a lot of interest, at least chatter, amongst the LP base to look overseas for opportunities, given how previously the US seemed to be the deepest and broadest opportunity set for investing in real estate. But folks are starting to look overseas and are becoming much more interested in what the return profiles might be in Asia or Europe, probably a little more Asia than Europe.

I think that wave will continue as the uncertainty at home continues through 2026. 

Jack: And largely for that diversification. 

Nancy: And what do you think about that? I mean, Carrie, Jack, you guys spent a fair amount of time in Asia this year. What do you think about the [00:10:00] opportunities  there relative to here? 

Carrie: I just think there's a tremendous opportunity for growth in those markets.

And I think that if you look at data centers alone, the largest market is 40,000 megawatts in the US. Second largest is China at 11,000 megawatts. The third is Japan at 2,800 megawatts. So if you think of the opportunity for growth just in the data center space, it's huge. Right? 

Jack: The biggest sort of eye-opening experience for me.

I mean, Carrie and I spent the better part of two weeks in Asia recently. Yeah, there and there is just so much unmet demand. There really is a shortage of institutional quality product there, and I think there are certainly ways for investment managers to find the right pockets and sectors, whether that be in life science or data centers, or hoteling, to really capitalize on the need for that quality institutional real estate. 

Carrie: And if you think about, I mean, we don't think about education as an investment here in terms of assets. One in five [00:11:00] children in this world sits in India and there was a huge focus on education. And so those assets are really valuable and there's been a great growth in private investment into education assets in India.

Robert: That's a great example. I'm a little upset that I didn't do more direct research like Carrie did. I just wanna go on the record. 

Carrie: These are all facts that sit in my head, Rob. 

Nancy: No. Rob, I'm with you. So one of the things I've been thinking about is how, for the first time in a long time, it feels like real estate equity is a contrarian bet.

If you think about it. It's been out of favor from, its- for institutional investors, performance has been very poor. It's certainly not met expectations. There's plenty of institutional investors who are revisiting why they're investing in real estate in their portfolio. A lot shifted over the last two, three years, rightfully so to private credit. 

But when you flip back to basic [00:12:00] fundamentals, there's almost no new supply. People are, it's, you cannot bill today at returns that equity wants because debt costs are so high because we have inflation, because of the immigration issue where 30% of construction workers are immigrants. There's a lot of reasons why there's real supply constraints and demand is evidenced by our economy is still pretty strong in lots of sectors.

So like is real estate qua real estate, whether you're in the US or Asia, is it the new contrarian play? 

Robert: I dunno if it's a contrarian play. I agree that the shine came off real estate for a bit, and obviously the equity markets have been on a tear for the past three years, but real estate in a proper portfolio, construction is supposed to sit somewhere between bonds and equity, right?

If you think about it simply, and I think a lot of folks felt that real estate was gonna create a disgusting amount of alpha, and [00:13:00] it did for a period of time, right? When interest rates were about zero, you could get in front of a real estate deal, and if you sold it at the appropriate time, you made a lot of money.

But these days when interest rates are back towards a more quote-unquote normal,  four to four point a half percent is probably where the 10 year sits, and you see it in our capital advisory business, which is everything outta the primary placement business. People are engaging more at that interest rate to do transactions, to do deals.

And you're hitting, kind of you're low to mid-teens returns. And I think that's where real estate's supposed to sit. And I think we're going back to a more normal return expectation for real estate. It's just gonna take a little time for the market to catch back up to that. 

Jack: Putting my consulting hat on, one of the biggest lessons learned was that you had to maintain vintage ear diversification and, and I don't feel like that's happened oddly.

That was, we continued [00:14:00] as a consultant to express upon our clients that maintain vintage your diversification. Real estate is cyclical. It goes up, it goes down. You're a long-term institutional investor with a 30 to 50 year time horizon. The smoothing effects will take care of the overall long term return.

And I feel like this time there's been this kneejerk reaction again to not come back to real estate. And so you sort of scratch your head a little bit and say, the shine coming off and we, anecdotally, I've heard of some plans reducing their real estate allocations, et cetera, so I just, maybe there are a lot of general consultants that are running their asset liabilities and their actuarial models and, and know something that we don't, but I just think back to lessons learned of past cycles and I wonder what the long-term outcome is going to be here. 

Nancy: But isn't that, once again, the institutional investors kind of being behind high net worth investors, family offices, and folks who are leaning into real estate equity right now. 

Robert: I think we all have to also remember going back [00:15:00] to 2022, and the first six months of 2022 was a huge time for investment in real estate, ton of re-ups, a lot of activity. We kind of hit all time fundraising goals in 2022, even though the last six months of 2022 when the Fed started raising interest rates, people really started pulling back. So there's probably a lot of institutional investors who still think they are participating in what is going on because that money is still being called.

And then this goes back to the drumbeat we all hear every day from all the investors, and we're pushing all of our clients to do it: distributions. Everybody wants distributions and if they don't get distributions, they're not gonna reinvest in these real estate managers. So I think if you put in context to kind of where we've come from and where we are, but also I was reading John's information on the Outlook for 2026 and I didn't appreciate that fundraising is actually pretty good in 2025.

We're feeling it a little bit, but the fundraising environment's gotten better. 

Nancy: That's an aggregate [00:16:00] number, and how much of that is the barbell effect? Meaning the very large funds are raising lots of dollars, but the medium size or smaller funds are much slower to raise and struggling.

Robert: I mean, none of the big boys are in the market this year other than the Brookfield, were they? 

John: Yeah. I mean, it's always an aggregate number. It's just interesting to look at it from a trend perspective. If you look at it relative to prior years, it is higher than any other fundraising year, prior to the pandemic.

So the last year that was this strong was probably 2021. 

Carrie: But you say that, and the first to final average timeframe is 35 months. 

Nancy: So, okay. Everybody just, just clicked off this podcast. 

Jack: But I, the one comment that I would make is that. Back to where we are, where we are in the cycle.

We've now seen four positive, or I guess there was one flat quarters of appreciation coming outta the ODCE index. And now we have also begun to see… [00:17:00]

Nancy: What's the ODCE index? 

Jack: It's the 24 open-ended commingled funds, some of the largest that we're all aware of, JP Morgan and Morgan Stanley, et cetera. And this is the benchmark that is used by probably it's 80% of institutional investors. So it's the core benchmark. It's 90% stabilized assets plus, et cetera, low leverage. 

And the point that I make is that using that as a data point, and if we're talking about real estate in the rebound in real estate, now we have core property that now has had four positive quarters.

Now I'm just slightly positive, one or 2%. But, and we're, and now we're beginning to see core dollars flow back in. So a lot of the open-ended funds are beginning to see contributions again. They are providing some level of distributions. And so if we use that to say, okay, are the institutional investors to the comment that we're making before catching up and beginning to move back into the market?

I think that that's beginning to happen. However, it's been four quarters, so they've missed four quarters of some appreciation. 

Brian:  [00:18:00] Just, I was just gonna add to that too, just in terms of 2025, like deal volume, right? If we look at just transactions were way up from last year. I mean, it'll be coming out of a frozen capital markets over the past couple of years, but this year I think as of Q3 we're at like 150 billion of transaction volume, which is up 25%. And we're starting to see the market reset driven by stabilized debt markets that so far where we sit today seem pretty healthy. And what's driving the transaction activity? It's LPs who want distributions to the point of DPI is the new IRR.

I mean, everybody's looking to get some cash back. There's refinancing walls where you have debt maturities and vehicles that are maturing and that's been a pressure building up for years, kicking the can down the road. And then you actually have market price discovery 'cause there's comps now. So we were in an environment where there were no comps, no one knew where values were.

And this year I feel like we totally transitioned out of that and we'll start to see more alternative capital structures to the point of the 35 months. [00:19:00] That's why continuation vehicles and recaps and other forms of capital structures are taking shape in this environment because that's just- it's not an easy button, but at least there's interest from both sides.

The GP wants to extend duration, find cheaper costs of capital, hold on to assets that still have value, and then from LPs coming in, they get the visibility to step into cash flow day one. And then you get distributions at scale back to investors. So it's something we're excited about. 

Robert: And I would say, we sit in a very privileged position because we get to see the entirety of the capital markets from the investment management firms all the way to the high net worth investors and everything in between. And people who are investing in real estate through the investment management firms, all the way to the end user investors investing in funds and the real estate transaction market is always gonna be the leading indicator of the fundraising environment.

And for the past, what did you say, Brian? Two years prior to the past six months? So, [00:20:00] 2022, middle of 2022 to the beginning of 2025, when we take on a capital advisory assignment and the recapitalization side, it was sort of like, hit this number or we're gonna pull the portfolio. Now it's, we're gonna hang out, we're gonna figure this out, and if we have to rejig the portfolio or a few assets get sold, a few get recapitalized. I think folks are waking up to the fact that one, interest rates are gonna be at the level they're at now for a little bit longer and your underwriting has to work there. And two, you need to get money back to your investors, like I said before, distributions, distributions, distributions. We're seeing that now on the capital advisory side and we'll start to see it, I think really pick up on the primary placement side.

Jack: It's really nice to see a new… It's always been private equities led this race in secondaries and it's nice to see now this new quote-unquote, vehicle available for real estate, for institutional real estate as a liquidity mechanism. I think that just given the amount of capital that has been raised, right, I don't know if you know if you have those stats or not, but the amount of capital that's specifically [00:21:00] targeted  towards that secondaries vehicles really is, is nice to see as an asset class, we now have this available option for managers to provide that liquidity option. 

Brian: Yeah. And the number you, you asked for the number, it's a very, it's not a very visible, transparent number, but if you count secondary specialists and then co-investors and others who are not specialists, but participate in the space, I mean, it's a, it's a pretty, the dry powder number is 20 billion plus.

Give or take, but they're on and off the fundraising trail, every other year. So,  deployment's been strong and I think you'll see that continue globally and a shift into this being- years ago, I think real estate secondaries and continuation vehicles were looked at towards like a tail end liquidity solution for the end of your fun life and whatever's left over and now it's, it's really more of a strategic tool to retain your better assets and give investors the option, give them liquidity or they can continue, and investors like options. 

Nancy: We had a manager, a prospective [00:22:00] client in yesterday, actually, talking about how in their latest vehicle they put in a liquidity provision so that the investors knew that one of the options would be to take this higher yielding portfolio and make it a developed core effectively, and that they could convert it to core. Are you seeing more and more of that? 

Brian: I think you'll see more and more of that in the documents in terms of optionality. But at the end of the day, that's a decision that's gonna be made by the key investors at that point in time. So it's great to have those bells and whistles because at least  you've thought about it. But I think it's a practical decision when the time comes, regardless. 

Nancy: So let's talk a little bit about the manager community or the manager side of this, because we are, when we think about where we are at the end of 25 compared to where we were at the end of 21, the manager community looks really different.

The big have gotten even bigger. They have cons. They have gone global. There've been a lot of manager consolidations and acquisitions, [00:23:00] and it's been harder and harder for emerging managers to raise funds. So where's the industry going? What do you expect to see in 2026? 

John: So, I think you alluded to it earlier with the barbell effect, and we look at the fundraising numbers, it's surprising to see that they're so strong on paper because it's clear that not everybody's feeling it.

And the people who are feeling it are, like you said, the large asset managers. On the other end of the spectrum: the sharpshooter specialized strategies, people focused on a niche that compliments existing portfolios. So we're seeing investors kind of construct their portfolios the same way you might construct your equity portfolio where you've got your core exposure through an index fund that sort of tracks the broader market, and that's kind of the mega managers' role in the portfolio.

And then you compliment it with some single stock exposure. Like maybe you wanna overweight Nvidia and in this case, like in real estate, maybe you wanna overweight IOS and you're not getting that through a diversified manager. [00:24:00] 

Nancy: What's IOS? 

John: Industrial outdoor storage. That's an example where a smaller emerging manager can break in because they're offering something differentiated. Those are the types of folks that are benefiting from the current fundraising environment. Being a diversified middle market manager is hard by comparison. Those are the folks that are getting squeezed in this environment, and that's where we're seeing a lot of consolidation.

Brian: I would add I think you're seeing a lot more interest in operationally intensive real estate. So if you think about data centers powered land, industrial outdoor storage to John's point, rail server logistics, cold storage, digital infrastructure, right? More of these durable cash flow streams where what do investors want?

They want predictable cash flow, fair underwriting, right? No one wants broker math. They want quality sponsors and operators that have platforms and opcos that really bring value to the propco, right? So that lends itself to a lot of these more infrastructure adjacent sectors that we've seen. [00:25:00] As I mentioned, all those sectors, we've seen inbound interest from infrastructure investors, and I think that is kind of where the market's going from a platform standpoint. I mean that for managers that are new to the scene, you've gotta have value in your opco rather than just being a landlord out there in the middle market, which I think is becoming more difficult to raise capital. 

Carrie: I also think you're seeing interest in manufactured housing. It has some of the same attributes as IOS: fragmented ownership, small deal size, difficult to manage, but investors really like the durable cash flow, the stickiness of the tenancy, and I think it's important on that side, investors are more interested in, in assets that the tenant owns the home than the rental model.

Robert: Yeah, I mean, I, and I agree with everything everybody's already said with regards to the big, getting bigger. I think that trend will continue. I do feel that as hopefully, one of the top placement [00:26:00] agents in the business, our job is to figure out the trends and figure out where investors are willing to overweight certain sectors.

To Carrie's point, manufactured housing. To John's point, IOS. To Brian's point, some of the more operationally intensive opportunities where folks just don't feel their allocators can access those plays and they're willing to overweight. I would also say the consolidation in the industry is a little bit driven by.

Capital that's being raised to buy these businesses. We've seen a lot more folks come in and,  I wanna call it GP stakes or whatever you wanna call it, but that's probably one of the more liquid parts of the real estate business. As… Everybody's nodding their head here. And there's some sort of knock on effects of that with certain LPs and how it all plays out. It'll be interesting in 2026, but there's been a lot of capital raised to buy stakes in these businesses, and they're trading at pretty nice multiples. 

Nancy: Right, I mean buying stakes in investment management businesses, but also in the operators themselves. In the past, those operators might have had different capital markets options. [00:27:00] They might've been able to go out and raise their own commingled funds. That's really hard to do today. So many of those operators are coming to us and saying, how do we either create a programmatic venture? How do we consolidate with another player in the industry to get bigger?  How do we go find perhaps a sovereign investor who can give us a large amount of capital?

And yes, we'll give up some control, but that's really how operators, real estate operators are accessing capital in today's market. I guess there was a period in time when they would IPO. Now we're seeing a lot more privatizations,  than we are IPOs given where pricing is in the public markets.

Robert: Yeah, I'd agree with that. And now there's a Swiss army knife of capital opportunities and aggregation. What have we done? 14, 15 first time funds at Park Madison, which is mercenary work, as we all know. I think everybody at this day will be hard pressed [00:28:00] to take on a first time fund right now.

Unless it's really interesting and very much probably the confluence of real estate and infrastructure and maybe it's power generation or something like that, but your run of the mill real estate group that has a great idea that's been investing in traditional real estate. There's lots of options for them to raise capital, but I would say a first time fund is something that's probably not on the table for a lot of groups at this point in time. 

Nancy: Well, and if you think about the handful of first time funds that have been created in the last year or two, they've largely gone out and raised a half a billion or a billion dollars of capital before they've even announced. So that's sort of what it takes today to be competitive in the business.

So we are in a different capital market. 

Carrie: Well, and they’ve been spin outs, right? 

Nancy: Not always. Sometimes, well, they've had track record from someplace else. But not always taking the whole team. 

Jack: We make these comments and yet we're in an environment where a lot of  [00:29:00] long-time employees at some of these established managers, these funds are out of the promotes and you're seeing movement to either new firms where they're creating, they're spinning out and creating their new firms, or they are launching a vertical at an existing firm. So we all sit around the table and say, wow, it's very difficult to be an emerging manager right now given all the attributes that Rob and, and Carrie and John just mentioned. However, at the same time, we are seeing a trend where there are new groups being established by very successful real estate investors with long-term careers.

So it will be interesting now to see does this anomaly that we've just talked about, does it change again? And are we going to see a plethora of new and emerging managers begin to rise in the ranks? 

Robert: A big thing that's also happening and the reasoning behind a lot of these sales is the lack of promote, the lack of co-investment dollars that are being generated by these funds.

They know that their next fund to stay in the hamster wheel needs to be slightly [00:30:00] bigger than their previous fund. That's usually the growth trajectory of these firms, and because the 2018 to 2022 vintage is tough, the promote dollars that are gonna flow off that the manager would usually use to tuck back into the next fund is not happening.

So they're looking around to figure out where that capital's gonna come from and if done properly, and it's maybe a minority interest, bringing in third party capital to help with those types of cash flow needs is probably a pretty good thing. And I think that helps markets run more efficiently. It's when you take a lot of money off the table and you're not reinvesting back in where investors start getting upset and I get it right, because they were supposed to produce returns for you, Mr. Investor. And those returns, you all kind of march together to a very happy place of very solid returns. But if those returns haven't been produced, and now you're selling a piece of business and putting a lot in your pocket. That's a hard place to be. 

Nancy: No, I think that's a brave solution and, and it's the right fiduciary call because what are your options if you really don't have the capital to reinvest in your next fund, you could sell the firm completely, or you could disband. Neither of those are good for your existing investors.

So finding a way to intelligently bring in capital for a minority [00:31:00] interest in the business and keep the business going, it is as we've already talked about, real estate's a cyclical business, so it's unrealistic to expect that all trees will grow to the sky all the time. Part of what we're seeing with the barbell effect is when you have very large firms, they can kind of withstand some of that buffer, but the smaller firms can't.

Robert: Well, I mean, when done properly, transparently, these folks that put you in business, your partners, your limited partners, they wanna be communicated with. And we all know that everybody says, oh, it's returns. That's, that's why people invest with us. Returns are important, but transparency always rises to the top, right?

Whenever you talk to any LP, what do they want more than anything else? Transparency, communication, and I think those who are transparent, who do communicate will benefit from the trust of their investors and their investors will then allow them to do certain things that will help the business. But if you're [00:32:00] not communicating your investors and you're not transparent, I think it's tough to bring on that capital.

Jack: Couldn't agree with you more. I think that is absolutely key to the continued growth of a lot of these platforms. You have got to communicate and communicate regularly and often in the good times and the bad. 

Brian: I also think there's a difference between an established fund manager who's selling a minority stake in their business versus an emerging manager who's looking for a strategic partner to help grow and scale in an environment where it's really tough to raise a comingled fund.

So those are, to me, different, totally different structures. And we're talking about alignment on both sides, but just wanna make the distinction. 

Nancy: So spoiler alert. One of the things I love about the Outlook is, our editor, John Sweeney, comes up with these really good quotes to lead off every year.

So I love the 2026 quote by Alvin Toffler, author of “Future Shock”, which [00:33:00] is hard to believe. When was “Future Shock” written? 

John: I don't remember when “Future Shock” is written, but this particular quote, which do you wanna read it? You want me to read it? 

Nancy: Go for it. 

John: All right. So this quote is from his book, the Third Wave.

Which came out in 1970. So this quote is 55 years old and it's “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” And I just felt that that was a- I'm always trying to find a quote that kind of captures the zeitgeist of the year.

This year, it just feels like the world is changing so fast with the advent of AI, the complete rearrangement of most of the foundational principles that we've all grown up with. Free trade, central bank, independence… 

Nancy: Globalization.

John: Globalization. The value of a college degree, like with AI, I mean you see like certain college degrees that used to [00:34:00] be super valuable in the modern economy, like computer engineering, computer science, those now have some of the highest unemployment rates for college graduates. So a lot of things are just being kind of turned on their head. It is certainly a time where people have to learn new skills and maybe adjust the way they think about the world.

Robert: So everything changes but everything does stay the same to a certain extent. And at the end of the day, we are gonna have midterm elections. And stuff's expensive and people don't like when stuff's expensive. And I think that's gonna really change the look of the government come November and there'll probably be a, potentially a landslide victory for the Democrats.

And what's the impact of that on how we are gonna change policy and what's the impact gonna be on real estate? 

Nancy: Well, it's interesting. We've made it through most of the podcasts without talking about the mayoral election in New York and our incoming mayor, Mamdani which you could say is. It's just a really hard name to say, by the way.

 [00:35:00] I apologize for that. But you have an interesting prediction in the Outlook with respect to candidates, and maybe we'll leave that as a tease for people to take a look at the Outlook. 

John: We'll leave it as a tease, but since you mentioned Mamdani, I am curious what everyone's views are on New York, given it's our backyard and right now there seems to be a lot of uncertainty surrounding this incoming administration.

Carrie: In times of uncertainty, there's opportunity. And I think that with, with some foreign investors exiting and people uncertain about New York, it's a great contrarian view and should be a great buying opportunity in this cycle. 

Nancy: And has proven to be actually, there's been some really interesting buys just in the last few months since the primary and probably will continue. Everybody's in the wait and see mode to see what happens when the new mayor takes office. But  [00:36:00] there's definitely, there should be some really good opportunities. And of course, occupancy on the resi side has never been stronger and there's supply.

The biggest issue, of course, is supply, will be constrained because if rents are flatlined, which they probably will be. You won't see renovations and you'll see even more of the housing stock going into this kind of limbo state. There's currently a significant percentage of the housing stock that's in this limbo state that hasn't been repaired and it's not even leased out.

John: Yeah, I mean if you look back at history, the mayor of New York City has very little impact on the performance of real estate in New York City. I would not characterize the de Blasio administration as pro-business and three of the best, like the top three transaction volume years in New York City in its history, were under his administration. 

New York City is driven [00:37:00] by the US macro economy. We are the financial, economic, media, cultural capital of the United States. And if the United States economy is doing well, New York's gonna be doing well. The mayor, the local politics, it ends up being background noise.

Nancy: We often like to end the podcast with a movie or book recommendations or travel recommendations or restaurant recommendations. Anybody wanna throw something out there?

Carrie: I was recently in Japan for the first time and it was fantastic. It's an amazing culture, great food, of course, and wonderful people. 

Jack: I spent the Thanksgiving holiday in Spain and began to re-read the book “Titan”. I don't know if anybody has read “Titan”, but it's the history of Rockefeller and being a native Clevelander where Rockefeller began his life and career.

It's not only about Cleveland because he then moved to New York and creates this world here. But a fascinating book. Highly recommend it. 

Robert: I spent my [00:38:00] Thanksgiving thinking about this amazing, amazing organization that we're working very closely with called Coffee Connectors, and you'll hear more about that on later podcasts.

Nancy: What a great note to end on. Well, thank you Jack and Brian and Carrie and John and Rob. Appreciate your time. 

Carrie: Thank you, Nancy. 

Jack: Thank you. Really enjoyed being here.

Nancy: I hope you enjoyed this episode of Real Estate Capital. Before you go, I have a quick favor to ask. We put a lot of thought and effort into this show and making sure we bring you insights from real estate leaders that you don't normally find in the mainstream media.

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