Goldman Sachs Asset Management to Resume Investing in U.S. Commercial Real Estate, Sees Market Bottoming Out
Goldman Sachs Asset Management to Resume Investing in U.S. Commercial Real Estate Amid Market Bottoming Out
CANNES, France (Reuters) – Goldman Sachs Asset Management announced on Wednesday that it will be resuming “actively investing” in U.S. commercial real estate this year, citing a market that is bottoming out. The co-head of its real estate business, Jim Garman, expressed confidence in the market despite recent challenges.
The prices of U.S. offices and other commercial properties, such as multi-family apartment blocks, have experienced a significant decrease due to higher interest rates and soaring vacancy rates since the pandemic began. This has caused concern among investors, with some labeling the U.S. office sector as the most oversupplied market globally.
However, Garman sees this as a buying opportunity, noting that interest rates are on the decline and there is a perceived floor in prices set by buyers active in the market. The underlying strength of the U.S. economy is also expected to support a rebound in the real estate market, although the pace of recovery may be gradual.
While acknowledging the challenges ahead, Garman remains optimistic about the resilience of the market, stating that banks are better equipped to handle the current downturn compared to the 2008-09 global financial crisis. Richard Spencer, managing director at GSAM’s Real Estate Principal Investments Area, emphasized the importance of a sustained deleveraging process for the market to stabilize.
In addition to these factors, the push for sustainable practices in real estate has led to a “capital expenditure supercycle” related to sustainability, according to Spencer.
Investors and industry professionals gathered in Cannes for the MIPIM conference shared their perspectives on the market outlook, with many expressing cautious optimism about the future of U.S. commercial real estate.
As GSAM increases its investments in real estate in Europe and Japan, the firm remains committed to navigating the challenges and seizing opportunities in the evolving market landscape.
(Reporting by Iain Withers Writing by Tommy Reggiori Wilkes Editing by Bernadette Baum)