Commercial real estate has been feeling real pressure from the rapid rise in interest rates, and Fred Hubler doesn’t sugarcoat it: some of the safest multi-family programs had to be written down by 20-30%, with riskier multi-family programs faring even worse. He also cites CBRE data showing a global office vacancy rate of 12.9% at the end of March, nearly matching the highs seen after the 2008-09 financial crisis, though he notes the broader economy is in better shape this time, suggesting work-from-home habits may be a lasting factor.
So where does Hubler see safety in this environment? He points to long-term net lease investments in essential retail, specifically top-quality tenants in only their top-performing stores. He explains that a net lease shifts property expenses like taxes, insurance, and maintenance onto the tenant, and when all three of those costs are covered by the tenant, it’s known as a triple net lease, comparing it to ordering a combo meal where the tenant pays extra for everything beyond the burger itself.
A shift in strategy: with commercial real estate under pressure, Hubler is steering toward essential retail and away from riskier multi-family exposure.
Hubler’s full breakdown of net lease investing is worth reading on Forbes: Is Real Estate Still A Safe Investment? Tips For Today’s Market