For this Field Note, we wanted to step back from individual projects and share a broader perspective on investing in real estate during what often feels like an unusually uncertain time.
Over the past several years, investors have had to navigate a series of events that would have been hard to predict in advance — a global pandemic, rapid inflation, sharply higher interest rates, supply chain disruptions, regional banking stress, and ongoing geopolitical tensions. Each of these has affected capital markets in different ways, and together they have created an environment where it can feel difficult to know what the next few years will look like.
While the headlines change, one thing we have seen repeatedly over multiple cycles is that real estate tends to reward patience and a long-term view. Properties are not priced every day the way public markets are, and that can make periods of uncertainty feel uncomfortable, but it also allows time for fundamentals to work themselves out.
Our approach has generally been to focus on assets that we believe will still make sense ten years from now, even if the next twelve months are unclear. That means concentrating on growing markets, controlling land at a reasonable basis, and developing projects that serve basic needs such as storage, industrial space, and other uses tied to population growth rather than short-term trends.
Periods of turbulence often expose the difference between projects that were built on strong fundamentals and those that depended on perfect market conditions. When capital is easy and interest rates are low, almost any deal can appear to work. When conditions tighten, location, cost basis, and operating discipline become much more important.
We have also found that uncertain environments tend to create opportunity for groups that are able to stay patient. When fewer buyers are active and financing is harder to obtain, competition decreases and long-term investors can sometimes acquire or develop assets at more attractive levels than were possible during stronger markets.
Another benefit of real estate during volatile periods is that income-producing assets provide a degree of stability that is not always present in more liquid investments. Cash flow may move up and down, but well-located properties that serve growing communities tend to remain useful regardless of what is happening in the broader economy.
None of this means that real estate is immune to cycles. Values change, leasing slows at times, and development can take longer than expected. The goal is not to avoid those periods entirely, but to structure investments in a way that allows us to work through them without being forced into decisions at the wrong time.
Our focus remains the same as it has been since the beginning — invest in growing markets, keep leverage at reasonable levels, maintain flexibility, and make decisions with the full cycle in mind rather than any single year.
In our experience, that approach tends to matter even more when the world feels uncertain.
