BEC 2024 Conference Recap

The Best Ever Conference, or BEC, is the premier forum for commercial real estate professionals and investors. This year’s conference took place in Salt Lake City, Utah, attracting thousands of attendees including professional investors, commercial real estate operating teams, sponsors, vendors, fund managers, tax service firms, property management software vendors, economists, data scientists, IT professionals, commercial real estate education institutions, and many others. The four-day event covered a wide range of topics, including passive investor forums, analysis and forecasting of the US economy, current trends in US commercial real estate, data analytics in commercial real estate, lessons learned from large-scale commercial real estate operations, entrepreneur experiences, competitions featuring elite teams pitching fundraising projects, and networking opportunities. Discussions encompassed all sectors of commercial real estate, including multifamily/apartments, warehouses, industrial facilities, retail centers, and office buildings, et al.

Here are some key takeaways from post-conference reflections:

On US Economic Analysis (David Rosenberg, Chief Economist at Rosenberg Research):

History tends to repeat itself.
Of the 14 previous Federal Reserve interest rate hike cycles, 11 ended in economic recession.
Economic downturns typically occur about two years after each interest rate hike.
As of 2023, credit card default rates reached their highest level in the past eleven years.
Inflation is determined by demand and supply. By the end of 2023, demand growth was lower than supply growth by 1.2%. Starting in 2024, demand growth is projected to be lower than supply growth by 1.4%, leading to a decrease in inflation, with an expected rate of around 2% in 2024.

On Commercial Real Estate Trends (John Chang, Senior VP of Research at Marcus & Millichap):

AI will impact the labor market, with varying degrees of effects across different industries. Occupations in computer science, mathematics, arts, design, entertainment, sports, and media are expected to be most affected by AI replacement, while occupations in agriculture, fishing, forestry, building and grounds cleaning and maintenance are expected to be least affected.
Current influences on commercial real estate include digital transformation and e-commerce. Therefore, technology is a significant issue for commercial real estate, whereas AI’s impact on commercial real estate is relatively minor at this stage and requires time.
Factors such as demographics and migration will affect the demand for commercial real estate. The baby boomer generation will generate more demand for elderly housing and welfare benefits. Over the next five years, millennials will become one of the main drivers of the real estate market, with their demand significantly impacting the market.
Housing prices are at historic highs, yet new housing supply is insufficient to meet demand, resulting in households being unable to form or expand normally.
The gap between apartment rents and monthly mortgage payments for owner-occupied homes has reached historic highs.
Political and public policy factors also contribute to uncertainty in real estate. A decrease in legal immigration may further exacerbate labor shortages.
Supply chains face increased risks, while trans-Pacific shipping costs are also rising.
Overall, demand factors for commercial real estate over the next five years are fundamentally robust, demonstrating a certain level of stability and sustainability.

On Risks Exposed by the Banking System (Neal Bawa, CEO of Ugro Investment and Multifamily University):

During commercial real estate cycles, the banking system faces potential risks.
However, major large banks have relatively low exposure in commercial real estate lending. It’s the regional small to medium-sized banks that carry a higher proportion of loans.
Careful consideration should be given to selecting banks for collaboration.

On Investment Strategies, Experience Sharing, and Networking (Perspectives from Attendees):

In recent years, an increasing number of commercial real estate operating teams have adopted the Fund of Fund strategy for fundraising. This investment strategy provides efficient, flexible, and SEC-compliant financing channels.
Building an investment network is crucial for passive investors. Passive investment doesn’t mean being passive the whole time; it requires extensive due diligence before investing. For operating teams, maintaining complete transparency and frequent communication with investors (even overcommunication) are essential.
Each investor should determine the allocation of commercial real estate private equity projects in their portfolio based on their investment goals, plans, and financial situation.
Commercial real estate is a team sport, and collaboration can maximize everyone’s potential.
For Chinese investors, solidarity, mutual learning, and assistance are crucial. According to the Chinese participant Eric Group, a fund manager, Chinese investors have significant potential in US commercial real estate. Hence, I established a Chinese CRE group at the BEC venue to facilitate mutual progress and growth.
To quote Tony Robbins, “Proximity is Power!” Networking is key to success, and building relationships with successful teams and investors, expanding one’s network, and surrounding oneself with elite individuals are crucial for advancement.
Finally, 2024 promises to be a great investment year, with many distressed properties likely to be forced to sell. We will seize opportunities and collaborate with elite teams. When projects meeting our underwriting standards emerge, interested investors can participate. Subscribe to our email list to receive notifications when such projects arise: http://eepurl.com/iyHNVA. If you haven’t connected with us yet (per SEC compliance requirement), you can schedule a one-on-one Zoom call here: https://calendly.com/acmgcapital.