- There's still opportunity in the commercial property market if investors look hard enough, the CIO of Nuveen Real Estate said.
- In particular, New York is seeing low vacancy rates in newer vintage buildings, while Miami office rents are sky high.
The US commercial real-estate market has seen deepening gloom in recent quarters, but investors can still find pockets of value in the embattled sector, according to the chief investment officer at Nuveen Real Estate.
In an interview with CNBC, Carly Tripp said it's clear there's a lot of distress in the office property segment, which saw troubled assets hit $64 billion in the first quarter of 2023. "But that story is layered," she said.
"Looking at New York City, the largest office market in the world, we have 90 million square feet of vacancy. But you peel that onion back and what you'll find is that newer vintage product built in 2015 and later on is only at a vacancy of less than 5%," Tripp said.
"Miami is another example of where we have seen tons of population migration, corporate relocations. As you all know, Miami office rents continue to outpace historical norms, continue to peak," she continued.
"There is value in office, you just need to know where to look," the Nuveen Real Estate CIO added.
The commercial real estate (CRE) industry has been under increased stress in recent months, fueling concerns that it could suffer a bout of turmoil similar to what US regional banks. The CRE sector has been facing multiple headwinds including high interest rates, tightening credit conditions, and work-from-home trends that's reducing demand for office space.
While Tripp is cautiously optimistic, other market commentators have warned commercial property prices could plunge by as much as 40% from their peak as the Federal Reserve plans to continue its interest-rate increases aimed at taming inflation.
"There is a lot of distress, but smart investors can take advantage of it," Tripp said.