A good summary from Rob Stuckey, head of Carlyle’s U.S. real estate funds, on US office building weakness, from Insights and Indicators podcast by Carlyle:
- Already weak before pandemic
- oversupplied
- low operating margin
- high correction to GDP / exposure to macro cyclicality
- Secular trend of work-from-home / technology trend
Factors to value real estate
- demand drivers (macro/GDP, demographics)
- technology
- operating margin (high maintenance/recurring capital expenditure)
- tenant stickiness (demand ever increasing)