Hotel REITs in the public markets have high yields and are trading at 8-10+% cap rates, making them a potentially lucrative investment option.
Compared to other real estate asset classes like multifamily and industrial, hotel REITs offer superior yields and lower capex burdens, making them a cost-effective choice for investors.
The hotel industry has faced challenges post-COVID, especially in urban markets, but with the recovery of leisure, group, and business travel, there is significant potential for growth and investment opportunities.
The impact of Work From Home (WFH) on office markets is significant but varies across industries and geographies.
Using vacancy data is crucial for assessing WFH impact on office demand, as it reflects space given back by firms and available for sublease.
WFH trend is more about financial reasons for many companies, especially those in low margin businesses, where reducing office space can lead to substantial cost savings.
Office REITs in NYC are currently undervalued due to fears of continued impact from work from home, but the market may be overestimating the potential decline in income.
Historically, NYC office space has been a strong performer, particularly in top tier buildings near major transit centers.
The current market is pricing in significant income declines for NYC office REITs, but factors like reduced supply growth and potential for office to residential conversions could help stabilize the market.