Rob Gilman: Is this Commercial Real Estate's Moment? - Compound Insights Recap

Podcast: Compound Insights

Published: 2025-07-14

Duration: 25 min

Guests: Rob Gilman

Summary

Rob Gilman discusses the current state of commercial real estate, focusing on budgeting challenges, interest rates, and the potential bottoming out of the market.

What Happened

Rob Gilman, partner and leader of the real estate group at Anshan, returns to the podcast to discuss the current state of commercial real estate. He highlights the unexpected challenges faced by clients due to variable interest rates and rising costs, especially in insurance and real estate taxes. Gilman stresses the importance of regularly reviewing and adjusting budgets in response to these expenses. He notes that while high-end residential rentals are doing well, other sectors like rent-stabilized multifamily units face difficulties due to regulatory constraints and rising costs.

Gilman explains that for commercial real estate, especially in New York, leasing activity is on the rise, although not to the levels landlords would prefer. He points out that Class A property rents are increasing, pushing some tenants to consider Class B properties. This shift could indicate a potential market bottoming, but he emphasizes that no one can predict a market bottom accurately.

The conversation also covers the implications of reduced IRS budgets on commercial real estate. Gilman notes that while real estate transactions tend to be straightforward concerning IRS interactions, complexities arise in transactions involving 1031 exchanges and investor buyouts. These could become more challenging with fewer IRS resources.

Gilman observes growth in data centers and storage facilities, driven by increased demand for smaller living spaces and subsequent storage needs. He sees these sectors as potentially profitable despite the overall challenges in commercial real estate.

The episode touches on the impact of federal incentives like opportunity zones, which have historically helped revitalize struggling areas. Gilman believes recent changes make these zones more targeted and effective.

Overall, Gilman provides a nuanced view of the commercial real estate landscape, balancing optimism about certain sectors with caution about ongoing challenges in others.

Key Insights