How Can Investors Stay Successful in Current Cycle?

SAN FRANCISCO—JP Morgan Real Estate Banking group recently hired Alex Mast as the Northern California market manager. With more than 12 years of experience in commercial real estate finance, Mast joins the firm from Bank of America’s commercial real estate group, where he helped establish a strong foothold in the Northern California region, nearly doubling the bank’s loan commitments and revenue.

In this exclusive, Mast recently discussed the state of the Northern California commercial real estate market, the most active asset classes, trends and secrets for success in the current market.

GlobeSt.com: What is the overall state of commercial real estate in Northern California?

Mast: The Northern California region has welcomed many of the top technology firms in the country, which is a large driving force of the local and global economy. In addition to the new technology companies, many of the country’s oldest, largest and most well-known companies are establishing a presence in the Bay Area because of the importance of technology and the associated human resources in this region. Technology is critical to the longevity of these companies’ business models. Accordingly, the value of real estate in Northern California has been steadily increasing. We’re seeing a lot of demand across all of the different asset classes, and the robust capital markets are supporting this growth. It seems that investors can’t find enough real estate to purchase. Overall, new construction has slowed, with the exception of multifamily developments in Oakland, a relatively new trend.

GlobeSt.com: Which asset classes are experiencing the most activity in the market?

Mast: We’re seeing growth in the industrial sector, as e-commerce is fundamentally changing distribution. We’re also seeing a high demand for office space from many new and old companies that are establishing technology business units in the Bay Area or planning ahead for future growth. With the job market continuing to expand, there’s an increasing need for office redevelopment and construction to accommodate the workforce. Office tenants are improving their spaces to create more amenity-rich experiences. Multifamily investment demand is also active and many investors are looking to hold on to these properties in the Bay Area, rather than trade or sell them.

GlobeSt.com: How can local CRE investors remain successful through the cycle?

Mast: Real estate is cyclical so it’s important to have a long-term strategy. Understanding where your equity and debt capital is coming from, as well as knowing how reliable and predictable your partners and capital providers will be, are critical to success through any cycle. Other factors to be mindful of include lease-up exposure, new technologies, the changing workforce demographic, tenant preferences and consumer behavior. Choosing the right companies to work with, from leasing brokers to lenders, that are committed to the real estate industry is key to remaining successful in a competitive market and changing economic environment.

GlobeSt.com: What are some trends CRE investors should be mindful of going into 2019?

Mast: There are a lot of debt options and equity is still flooding into real estate. Commercial real estate investors, developers and property owners should continue to think about investing for the long-term and working with businesses and organizations with a long-standing presence. Additionally, with construction costs and interest rates continuing to increase, new construction may continue to slow as a result. With limited supply and strong demand, other implications, such as affordability, infrastructure and labor costs, are important considerations for the future. Having strong relationships with industry partners and financial providers will be key to remaining successful throughout the changing industry.

GlobeSt.com: How is your team working with local real estate investors and what are you looking to achieve in your new role?

Mast: Northern California, specifically the Bay Area, is home to many exceptional institutional real estate investors, developers and property owners. We’re seeing that our clients are looking for access to a wide array of financial solutions, whether it’s term debt, subscriptions facilities, revolving lines of credit, cash management, investment banking, among other solutions. They also want to work with industry and local experts who truly understand their business objectives. In my new role, I’ll be working closely with our real estate banking clients in Northern California, helping to bring them customized financial solutions to meet their complex needs and reach their financial goals.