The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.
The disruption that is being experienced now across various asset classes isn’t expected to simply stop. The latest trends will be following these disruptions, such as those currently found in hotels, retail, or offices. While multi-family and industrial are being currently overvalued due to their steadfastness during the pandemic, this may not be something to be relied upon quite as much going forward.
Richard Wilson: What are some long-term trends that you think most people are ignoring or denying even exist right now but you think are going to come to be true?
Ben Marks: Wow, again, how much time do you have? There’s a lot of them, I’ll try to go with some of the bigger ones. I’ll kind of go by asset class, at least the ones we’re invested in. I think the scary thing about multi-family, which is probably the strongest out of all the asset classes right now is really we’re just seeing a tremendous amount of capital really flowing out of every other asset class and sort of being siphoned off into multi-family there’s good reasons for that in the sense that the disruptions technologically coming down, which you heard me talk about ad nauseam at this point, they’re actually starting to materialize. We were talking earlier about Tesla, which is a wonderful company, I love my Tesla, and I remember good friends of mine laughing at me saying years ago when I bought it “Oh it’s just a, you know, an electric car. I’ve driven them, they’re terrible, they have a 15 mile range and yaddah yaddah.” And here we go 7 years later, and they’re bigger than every other car company in the world put together. That wouldn’t and couldn’t happen 20, or 30, or 40 years ago. It certainly wasn’t happening when I started out in the late 90’s. And so I think the rate of disruption and the rate of change is just getting faster and faster. The effect of that, I’m going to bring you back to real estate, is commercial – multi-family is probably getting overvalued, just because there’s a lot of fear in every other asset class, industrial is probably becoming overvalued same reason, the rush to internet marketing and sales and Covid I think accelerated that as well. And then the other asset classes which are office, hotel, and retail are going through massive disruption. The office disruption probably in my opinion is the greatest, even though people talk about retail, retail is a very close second and then hotels which hopefully is temporary, I don’t know. But the trends that we’re seeing are not going to stop, they’re going to accelerate in my humble opinion, and the rate of disruption across all industries which will indirectly affect real estate is going to be significant. So getting ahead of those trends is what we’ve tried to do and continue to try to do.
Richard: Right. Makes sense.