The Best Ever Conference returned for its ninth installment in March 2025, with BEC IX featuring an impressive cast of commercial real estate experts and nearly 1,000 active and passive investors.
While the attendees enjoyed world-class networking, partner-hunting, and collaborative conversations, on the big stage, speakers shared insights on everything from the real metrics driving the multifamily market, costly mistakes sponsors make, and why office real estate is far from dead — all capped off with a fierce debate on whether the Fed has achieved its desires “soft landing,” starting a new real estate cycle.
Here are some highlights from Day One of the conference.
Jay Parsons: Multifamily Market Outlook
The multifamily housing market has been — let’s call it … complex over the last few years. In his multifamily market outlook at BEC IX, economist Jay Parsons took the stage to dive into the numbers and help us make sense of it all.
Despite occupancy rates declining from pandemic-era peaks, they remain relatively healthy around 95%, Parsons says. The primary challenge is that unprecedented levels of new supply (nearly 600,000 units completed in the past 12 months) have outpaced increasing demand, resulting in flat or declining rents across many markets, particularly in the Sun Belt and Mountain regions.
Here are some key takeaways from his talk:
Demand Remains Strong: 2024 saw the second-best year for net absorption (move-ins minus move-outs) in over three decades. The issue isn't lack of demand but rather supply at the highest levels in 50+ years, spreading demand across more properties.
Income Growth Is Outpacing Rent Growth: For over two years, wage growth has consistently exceeded rent growth, widening the "demand funnel" by making apartments more affordable to a broader population – a positive trend for the industry long-term.
Supply Is Projected to Decrease: "Supply is the easiest thing to forecast,” Parsons said. “We know where this is going with pretty good certainty. It's going way down." Multiple indicators point to a significant drop in future supply, including declining architect billings, projects not penciling out economically, tight bank lending, and multifamily permit levels falling back to mid-2010s levels.
Investment Opportunities Are Becoming More Segmented: Class C properties face greater challenges than Class A/B, with filtering effects causing steeper rent declines in high-supply markets. Institutional capital is focusing on newer Class A and B+ properties in quality submarkets.
Regional Performance Is Shifting: After coastal markets recently outperformed due to supply constraints, Sunbelt markets are likely to regain their advantage as supply normalizes. Midwestern markets have shown less volatility, and smaller tertiary markets have consistently outperformed larger metros over the past five years.
Conclusion
For multifamily investors, the outlook encourages patience while the market works through the current supply peak, with conditions likely improving significantly by late 2025 as completions fall below historical averages.
The data points to strategic opportunities in high-quality suburban properties, select Midwestern markets with steady performance, and diversified investments in growing tertiary markets — all while being more cautious with Class C properties in competitive submarkets. And with supply coming down, the opportunity is coming back in multifamily.
Veena Jetti: Costly Mistakes Sponsors Make
The multifamily bull run of the 2010s may have felt like it would last forever, but deep down, we all knew better. Now, here we are, still navigating a turbulent (although increasingly stable) market.
In her presentation at BEC IX, multifamily investor Veena Jetti explored the costly mistakes sponsors make, and her underlying thesis was that sponsors must adapt to the market. Failing to "unlearn" outdated practices and adapt to new market conditions, she warns, can lead to costly mistakes, similar to how BlackBerry lost $33 billion in market cap by refusing to rethink its strategy.
Here are some of the key mistakes she highlighted that sponsors make in today’s market:
Poor Debt Structure: Many deals aren't penciling due to expensive debt. Jetti suggests seeking properties with assumable low fixed-rate debt as an alternative, sharing examples of deals her team secured with rates under 3%.
No Protection Against Variable Expenses: Sponsors with variable-rate debt have seen their payments nearly double. Jetti recommends rate cap insurance to mitigate the risk of rising interest rates.
Inflexible Capital Structure: Traditional financing approaches may not work in today's market. Creative solutions like asking sellers to carry back notes or finance-specific improvements can make otherwise impossible deals work.
Unrealistic Hold Periods During Market Volatility: Jetti recommends underwriting for longer hold periods (potentially 10+ years) during market downturns, giving properties time to recover before exit.
Outdated Technology Implementation: Failing to leverage AI and other technologies across operations represents a missed opportunity for cost-effective income generation and operational efficiency.
Conclusion
For multifamily sponsors navigating today's challenging environment, success requires the willingness to innovate and embrace creative problem-solving.
"We owe it to our investors to always be willing to rethink our strategies,” Jetti said. “If we get stuck and stagnant, that's when we and our investors start getting hurt.”
The most successful sponsors will be those who run directly into the storm with innovative approaches rather than trying to outrun it with outdated tactics.
Panel Discussion: Beyond Multifamily
With multifamily markets facing supply and financing challenges, sectors beyond multifamily have never been more appealing to investors. Just ask Ash Patel — even if you don’t ask, he’ll tell you anyway. Patel led a panel of experts in office, retail, and mixed-use development at BEC IX to discuss the specific advantages of diversifying into different property types.
Here are some key takeaways from the discussion:
Going Against the Flow: Human nature drives us to run toward the next shiny object. It’s a strategy rooted in FOMO that often leads to disappointment and, in CRE, sub-optimal outcomes. Office specialist Mike Mangione highlighted his counter-approach, citing that true value-add investing requires finding assets "below intrinsic value where the flows of funds aren't." This contrarian approach has led to significant opportunities in office space and other out-of-favor asset classes.
Office Isn't Dead, It's Evolving: The panel emphasized that well-located suburban office buildings can be purchased at dramatic discounts ($100/sq ft versus $500/sq ft replacement cost). CRE developer Tyler Cauble said, "If we were gonna see an absolute travesty in the office market, it would be happening now, and it hasn't."
Retail Is Experiencing a Renaissance: Despite headlines about retail bankruptcies, vacancy rates are at historic lows. Chris Hatch, a retail expert specializing in drive-thrus, observed that very little new retail has been built in the last decade, creating opportunities for those who understand the sector's evolution beyond traditional shopping.
Cash Is Still King: The panel stressed the importance of conservative capital structures in the current high-interest rate environment. "Cash is a lot like oxygen,” Mangione said. “You don't think about it until you run out — and then it's all you think about."
Apply a real estate lens to everything: Tyler shared how he bought a car wash but reimagined it as an outdoor food hall, demonstrating how creative approaches can unlock value. "Everything has a cap rate,” he said. “Put a real estate layer over everything you look at."
Conclusion
While multifamily has dominated investment conversations, significant opportunities exist in other sectors for those willing to be contrarian, patient, and creative. Extend your time horizons, focus on cash flow rather than IRR, and look for assets in walkable suburbs where tenant demand remains strong despite broader market narratives.
And, most importantly: Investing principles apply across asset classes. Understanding replacement costs, market rents, and operating expenses remains fundamental regardless of property type.
Debate: Has the Fed Achieved a Soft Landing?
BEC IX brought together some of the brightest minds in CRE to debate one of the most divisive topics regarding the state of the economy: Has the Fed achieved a soft landing, and has a new real estate cycle begun?
The debate featured the Mad Scientist of Multifamily, Neal Bawa, and the Co-Founder of Aspen Funds, Bob Fraser, arguing for the motion with economist John Chang and CRE expert and self-proclaimed data nerd Greg Katz opposing it. The discussion provided valuable context for CRE investors trying to understand the current macroeconomic landscape and its implications for the next investment cycle.
Here are some of the key points from the debate:
Definition of a "Soft Landing"
- For: The Fed's three interest rate cuts signal confidence in economic stability. Historical soft landings typically occur when the Fed reverses course and begins cutting rates, which is exactly what we're seeing now. The moment the Fed felt comfortable enough to drop rates, it demonstrated their belief that a soft landing has been achieved.
- Against: Inflation remains stubbornly above the Fed's 2% target (currently at 2.8-3.3%), and the Fed has only reversed 100 of the 525 basis points they initially raised. The Fed has essentially "waved off" the landing due to renewed inflation concerns, suggesting they don't believe we've achieved a true soft landing yet.
Economic Resilience vs. Inflationary Pressures
- For: The economy has shown remarkable strength despite aggressive rate hikes, with consumer spending up 40% since COVID, household debt service at record lows, real household net worth up 30%, and GDP growth between 2.5-4%. This resilience in the face of rapid monetary tightening demonstrates the success of the Fed's approach.
- Against: Everyday costs remain significantly elevated across food, utilities, and housing, with many Americans priced out of homeownership. These persistent affordability challenges are reflected in recent sharp drops in consumer confidence. A true soft landing would see inflation contained without this level of consumer pain.
The Trump Administration's Impact
- For: Trump's policies will be net deflationary, as reducing the federal workforce (potentially 300,000 jobs) and deportation policies would remove spending from the economy. Additionally, opening lumber and oil production would lower commodity prices, creating downward pressure on inflation that will help the economy continue its soft landing.
- Against: The planned 25% tariffs on imports from Canada, Mexico, and China would significantly increase costs, as 45% of consumer goods and building materials come from these countries. Reducing the immigrant labor force would create labor shortages in construction, driving up wages and construction costs — both highly inflationary factors.
The AI Revolution's Economic Effects
- For: AI represents a bigger economic accelerator than the internet revolution, driving unprecedented productivity gains and corporate profits. Tech infrastructure is developing much faster than during the internet boom, explaining high market valuations and economic resilience. This technological revolution will power the next economic and real estate cycle.
- Against: Infrastructure limitations in power and data centers will significantly slow AI implementation, with Oxford Economics predicting a 10-year timeline for full implementation. Current high P/E ratios echo the dot-com bubble before its burst, suggesting tech optimism may be disconnected from real-world limitations.
Conclusion
While the economy shows resilience, inflation concerns, potential tariff impacts, and economic uncertainty remain significant. Investors should recognize this transitional period requires focusing on fundamentals and selectivity rather than assuming a clear new growth cycle has begun.
Further insights from BEC IX:
Day Two Recap
John Chang's 5 Bold Predictions for 2025
Joe Fairless's Keynote: How to Thrive in '25
