Edward Dittmer, founder and principal of Avenida Strategies and partner at Yonder MHP, is offering a candid assessment of the real estate market, drawn from more than two decades of experience. Dittmer's expertise spans acquisitions, underwriting, portfolio management, commercial mortgage-backed securities credit ratings, and research, making his insights particularly noteworthy, as he highlighted in an interview with CRED iQ.
Reflecting on 25 years of business cycles, he cautioned against complacency—especially during periods when the market appears robust and money is abundant. “When everything seems to be clicking and the money starts to flow easily, everyone thinks they are the smartest person in the room,” Dittmer remarked. “And when you think you can’t screw up, that’s when you start to make mistakes.”
Turning to trends in the office sector, Dittmer acknowledged the significant challenges that have unfolded in recent years. However, he warned against premature optimism. “I would just be cautious about deciding that everything is in the past,” he said. According to Dittmer, business cycles are slow to resolve. While some Class A office spaces remain resilient, other owners—particularly those who acquired properties with high leverage at low interest rates—are struggling to refinance. In contrast, Class B and C properties face greater instability.
In the multifamily sector, Dittmer described a market “pretty badly overbuilt,” hampered by “some pretty lousy business plans.” Despite its struggles, the asset class still benefits from persistent housing demand. The rising cost of homeownership, especially with higher interest rates, has shifted many markets in favor of renting. “The monthly cost of ownership versus rent along with higher interest rates have pushed a lot of markets in favor of renting over buying,” he said, adding that upcoming waves of college graduates may have little choice but to rent, which could strengthen multifamily’s position.
Addressing the impact of technology, Dittmer pointed to artificial intelligence as a sector with genuine growth prospects. “The AI boom is real,” he observed, noting that the influence stretches far beyond data centers. Companies with strong connections to AI are attracting investment for real estate and other needs, increasingly becoming influential players in the market. As for data centers themselves, Dittmer stressed the need for a deeper industry understanding. “I think a lot of people will call something a ‘data center’ and hope that people throw money at it,” he said.
The discussion also touched on financing, highlighting the ongoing tension between CMBS and traditional bank lending. Dittmer explained that borrowers continue to hesitate about exposing proprietary information required for CMBS loans, while banks and life insurance companies face constraints due to strict underwriting standards. He believes private credit could play a vital role in bridging this gap, calling it beneficial for the market.
Finally, Dittmer commented on interest rates, projecting that short-term rates may ease slightly. Even so, he cautioned against making deals dependent on significant rate drops. “If you like the deal at today’s rates, you’ll be thrilled if they come down over the next couple of years,” he said. “But if a deal doesn’t work without rates coming down, then it doesn’t work.”
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