On March 10th, Cia Buckley Marakovits, Chief Investment Officer, Partner and Managing Director at Dune Real Estate Partners, joined the Graaskamp Center’s Virtual Leadership Series as its featured speaker. With over 25 years of leadership experience in the real estate, Buckley Marakovits is one of the most experienced and respected women in the real estate industry. She started her career in 2010 at Dune Partners, a leading real estate investment firm which has raised over $4 billion of equity capital and invests on behalf of pension funds, sovereign wealth funds, endowments and other large institutions and individuals.
Takeaways from Cia Buckley Marakovits’ Real Estate Outlook
As an opportunistic investor, Buckley Marakovits believes there is potential for rebound in every sector but emphasized that each portfolio should be representative of the specific investor and the type of risk they are comfortable with. Below are her main takeaways by sector:
- GDP Growth: Passing of another round of stimulus support was a key factor in boosting GDP projections, despite Buckely Marakovits’ concern that the amount might not be adequate. As vaccines rollout, people can now see an end to the pandemic so growth will return. When analyzing GDP, she discussed how COVID-19 has changed where GDP production comes from in the United States. States like California have seen a large amount of emigrating due to the pandemic and many businesses are moving elsewhere to more affordable locations, thus spreading out GDP within the U.S.
- Hotel and Retail: Travel and leisure will return as the vaccine rollout continues. Many investors want to play the recovery and, despite retail’s secular issues with commerce, there is potential return in every sector and many investors are re-financing retail redevelopment opportunities.
- Lodging and Entertainment: These sectors were severely hurt by the pandemic, however, there will be more transaction activity later this year. Similar to travel sectors, many investors want to be opportunistic in these assets but are reluctant to invest in properties that currently do not have positive cash flows.
- Office: The future of the Office sector is very ambiguous, and many investors are hesitant to invest right now because office properties do not produce high cash flows, so a property’s value relies greatly on the market. With expenses rising and revenues being challenged, Office sector is very volatile but with potential for high returns by creating unique office markets.
- Housing: The market has seen a clear shift from urban to suburban housing due to the pandemic and she believes this trend of people spreading out will continue. That being said, urban living will likely see a return as rents begin to rise to their pre-COVID values. She believes the housing market will continue to rise broadly but is concerned with the lack of supply and the resulting price increase.
- Industrial: The pandemic’s heavy social restrictions led to a huge boost in e-commerce which brought attention to the investment value of the Industrial sector. Previously not a popular asset class, Buckley Marakovits stated that many institutional investors discovered industrial as a positive investment due to e-commerce.
What qualities and traits are important in the Real Estate industry?
Buckley Marakovits was adamant that being a great partner is essential to succeed. She said, “I’ve had great investments with bad people and has learned over the years that it is not worth doing a deal with someone who is a bad partner.” She continued, “to succeed, you must have great communication and work together to align each other’s goals of the project. This will create a much more fluid relationship and a great long-term partnership built on being a team player. People in the industry appreciate those who have integrity and respect with everyone they meet at every level of the development chain.”
What about a “Black Swan” event?
In closing, Brennan asked Buckley Marakovits if she is concerned about a future “black swan” event. She is primarily concerned about the specific regulations and risks that are becoming intertwined with politics and how a polarized political environment might create a higher level of volatility within real estate. She also expressed concern over the lack of affordable housing and the constant importance of finding trends where more affordable housing can be developed with public approval.
Register here for our next Virtual Leadership event on April 14th with John Brady, Managing Director and Portfolio Manager, Oaktree Capital.