Navigating Opportunities and Challenges in Today’s Real Estate Market
Baird’s Real Estate Investment Banking team has an established track record of providing clients with comprehensive strategic advisory and capital market services. The group’s transaction experience, ongoing projects and frequent dialogue with industry participants provide unique insight into the real estate capital markets.
Today’s real estate market provides both opportunities and challenges brought on by inflationary pressures and soaring interest rates. What we’re seeing:
Inflationary Pressures
- As rents begin to moderate, high operating expenses brought on by rampant inflation have hurt NOI margins that property owners are able to achieve
- Elevated construction costs have made it difficult for real estate developers to achieve attractive yields-on-cost and meet minimum underwriting thresholds
Challenging Debt Environment
- Soaring interest rates have erased cash flows, and created general distress amongst property owners with floating rate debt and made it difficult to cash flow on new acquisitions
- As commercial banks across the country face losses, access to credit for new acquisitions and refinances has become constrained, making it difficult for deals to pencil
These challenging times require strong partnerships, and having the right partners in place can be the difference between success and failure. Here at Baird, our Real Estate Group has a track record of providing unique solutions for clients, and we work with our clients to thoughtfully and discretely find the best outcomes. Whether an owner/operator or a fund, our team has the experience and expertise to provide world class execution.
Now is the time to prepare for 2024 and best position your firm to capitalize on the unfolding environment. We welcome the opportunity to discuss how we can assist with your firm’s growth and strategic objectives.
