Let the Flywheel Spin

It’s not news to anyone that uncertainty has dominated the real estate capital markets. U.S. investment volume increased 14% in Q1 2025 but remained well below the trailing five-year average. Early this year, fundraising revived appreciably from 2024’s low level but slowed significantly as the calendar turned to Q2 amid macro market turbulence.

At the same time, nearly $1 trillion in commercial real estate debt, or 20% of the $4.8 trillion outstanding, is set to mature in 2025, a wave that has been building for years. Clearly, many investors are waiting to make their move and seize strategic opportunities.

The highest returns will likely be achieved in the coming quarters—but capitalizing on those returns requires action now.

I lead CBRE’s investor client coverage team for the U.S. and Canada. Our job is to advocate for our clients—among the largest institutional investors in the $4 trillion asset sector—helping them drive measurable value through the entire life cycle including fund strategy, underwriting, bidding and financing, lease-up, building operations and experience, portfolio valuation and, finally, the exit.

Lately, many of our clients tell us they “need more data” before acting. Historical data is of course critically important in our sector. But it’s not the only thing. The numbers lag the reality on the ground—and in a market like ours today, that reality is feeling increasingly noisy.

How can we hear the signal through the market noise?

It’s time for a first-principles reset that goes beyond the historical data to meet the market of today. How? Run every real estate decision through a simple expected value (“EV”) framework.

EV = ∑(Probability of Outcome x Payoff) - Cost

This framework incorporates the three primary levers that determine investment outcomes:

• First is asset selection. Investors have total control over this one. You choose property sectors with structural tailwinds you can’t outrun. Same goes for markets (and submarkets).
• Second is valuation and allocation. You determine what price you’re willing to pay at entry and what weight to hold. Changing tides will lift and lower all boats, but you decide where to anchor.
• Finally, the timing of cash flows. You choose when capital goes in and more importantly when it comes out. Internal rate of return is the success barometer no spreadsheet can tame.

This approach may not be perfect, but it does drive transparency and accountability and helps to focus decisions around solid bets (instead of overwrought assumptions).

Perfection is a tax with a steep price.

Occasionally I still catch myself turning a client’s request into what I think should be answered in a 20-page slide deck—then re-run the data, double-check the research, rewrite the output and, finally, start over in the hope that the perfect inputs will lead to an even better outcome.

The result of all this is rarely a better outcome. Instead, it’s often a lost opportunity.

The breakthrough usually comes when I drop long-form text, cancel cross-function internal meetings and pick up the phone to advance the client need in 10 minutes.

The lesson here: Act when you are about 70% sure of the downside. Treat the missing 30% as a risk premium you are willing to pay to own the upside.

And remember, buying and selling assets are not rivals.

In the capital-rotation flywheel, buying and selling are twin gears: Sell assets whose forward EV has rolled over. Redeploy capital into asymmetric upside plays. Do it over and over again.

Movement compounds. Relative value is the compass. The market is broadcasting a message: Reward cash-flow growth, discount structural drag.

Listen, rotate and let the flywheel spin.

Paralysis is taught. So is decisiveness.

Some investors will buy too early, and some will sell too late. The heavier cost falls on those who decide not to act at all, which is a decision in itself. Time quietly taxes future net present value. Cash that sits earns nothing above the risk-free rate. Portfolios that rotate do not wait for better weather—they make it.

And even with today’s challenges, compelling opportunities still exist in certain sectors: non-prime Class A office buildings in coastal gateway markets; industrial assets along the I-35 corridor (stretching from San Antonio to Minneapolis) that capitalize on trade shifts; well-anchored retail centers; Midwest multifamily markets; and data centers, which benefit from structural demand drivers.

Investors should no longer feel frozen. Momentum rewards movers and hesitation compounds nothing.

Conviction beats perfection.