The Real Estate Cycle Is Turning | Josh Pristaw on The New Cycle in Real Estate, Opportunity in Senior Living, Why AI Data Centers Are Too Big For Most Investors – Monetary Matters with Jack Farley

The Real Estate Cycle Is Turning | Josh Pristaw on The New Cycle in Real Estate, Opportunity in Senior Living, Why AI Data Centers Are Too Big For Most Investors – Monetary Matters with Jack Farley — Transcript

Market views

Bullish

SENIORHOUSING— Senior housing presents a compelling demographic-driven opportunity with 10,000 people turning 80 daily requiring 125,000 beds annually, while peak historical construction was only 56,000 units. Current pipeline is 25,000 units, requiring a 5x increase in supply chain capacity over 15 years. Clarion sees this as their highest conviction theme with the best projected forward cash flow growth of any asset class.
MULTIFAMILY— Multifamily rental housing benefits from strong demographic tailwinds with the 35-49 age population (peak household formation) growing by 6.5-10 million people over the next decade. Excess supply from 2020-2021 is being absorbed, with markets stabilizing and some showing positive lease trade-outs. San Francisco seeing significant rent growth driven by AI job growth.
INDUSTRIAL— Industrial/logistics real estate benefits from sustained ecommerce growth with annual ecommerce sales expected to grow by $1 trillion over the next decade. Clarion signed 8 million square feet of new leases in Q1 2026, their best quarter in 44 years. Net absorption now exceeds new deliveries after 2023-2024 digestion period. Northern California advanced manufacturing around AI/robotics creating strong demand.
REALESTATE— Broader real estate market entering new cycle in 2026 with seven consecutive quarters of positive returns, prices adjusted 25%+ creating attractive entry points, fundamentals strong with positive net absorption exceeding deliveries across most asset classes. Transaction volumes recovering to healthy levels.

Bearish

DATACENTER— Data center market faces significant absorption challenges with $1 trillion under construction (3x the entire institutional core real estate index of $280B). Limited institutional capital to purchase completed facilities - Blackstone's $2B fund represents only 2% of construction pipeline. Expected returns likely to revert lower as market matures. Construction delays from municipal objections, utility constraints, and supply chain issues.
OFFICE— Non-trophy office (Class B/C) faces structural decline with depreciation and declining values expected. High capital intensity to replace tenants (hundreds of dollars per square foot in tenant improvements) creates cash flow volatility. Only trophy Class A office in select locations recovering, while older suburban office still struggling.

Not investment advice.

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Market views