The Rise Of Industrial Real Estate In Opportunity Zones, With Peter Ciganik

Logistics-based industrial real estate has been a strong sector in recent years, with the growth of e-commerce continuing to fuel its rise. Will industrial continue to outperform in 2023?

Peter Ciganik, senior managing director at GTIS Partners, joins the show to discuss the bull case for the industrial sector and how Opportunity Zones may be utilized to help accelerate its growth.

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Episode Highlights

  • Some of the challenges that commercial real estate investors are currently facing, including record-high inflation, rising interest rates, market volatility, and a downturn in transaction volume.
  • Why logistics-based industrial real estate has been a bright spot, and why GTIS Partners continues to be bullish on the sector.
  • How some industrial locations came to be designated as Opportunity Zones.
  • Other Opportunity Zone strategies that Peter thinks may perform well in 2023 and beyond.
  • Private equity real estate trends that may unfold over the next few years.

Guest: Peter Ciganik, GTIS Partners

About The Opportunity Zones & Private Equity Show

Hosted by OpportunityDb and WealthChannel founder Jimmy Atkinson, The Opportunity Zones & Private Equity Show features guest interviews from fund managers, advisors, policymakers, tax professionals, and other foremost experts in Opportunity Zones and the broader private equity landscape.

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Show Transcript

Jimmy: Welcome to the “Opportunity Zones Podcast.” I’m Jimmy Atkinson. Will industrial continue to be one of commercial real estate’s darlings of 2023, and how can Opportunity Zones be leveraged to help grow that sector? Joining me on the show today to discuss industrial and more is Peter Ciganik, senior managing director at GTIS Partners, and he joins the show today from New York City. Peter, it’s great to see you again. Thanks for coming on the podcast. How you doing?

Peter: Hi, Jimmy. Great to see you too. Nice to be on the podcast again, and starting off a new year. I’m excited to talk about industrial today. It’s one of the sectors that we focus on.

Jimmy: Yeah, fantastic. Really excited to learn more about this sector. I don’t think I’ve had an episode of the “Opportunity Zones Podcast” that is focused on industrial like I know our conversation will today. Well, Peter, again, like I mentioned, it’s great to see you again. Last time we interacted was at your annual meeting at the GTIS Partners headquarters in Midtown Manhattan, New York. We also did a site tour of one of your multi-family projects in OZ, right across the Hudson River, in Hackensack, New Jersey. That was a great time we had there, and we had a pretty good group of attendees there. And hopefully, we do more of those in-person events with you in the future, Peter.


But let’s start off and talk industrial here for the bulk of our conversation today. I wanna get to industrial in a minute, but first kind of wanted to cover who you are, and then who GTIS partners is. I’m sure most of our audience of high-net-worth investors and advisors have some familiarity with your group already, Peter. But for those who aren’t familiar, could you give us a brief introduction to GTIS, and what is your role there?

Peter: Sure. I’m one of the partners here at GTIS, a real estate private equity firm, headquartered in New York, with offices around the country. We manage about $4.5 billion of AUM across residential and industrial property types, mostly focused on the Sunbelt. Big, regional markets in the Southwest and Southeast, across those two property types. And we’ve been around since 2005, but a couple of years ago, when we first met, we really stumbled upon the Opportunity Zone program as a way to optimize tax exposure for high-net-worth individuals who would like to invest in real estate. Prior to that, we really just managed capital for large institutions, pension plans, and endowments. But in the last three or four years, we have really grown, I think, into one of the largest Opportunity Zone managers, with a series of funds that focus on this program.

Jimmy: Yeah, you have quite a few properties spread all throughout the country, and then maybe we’ll save some time toward the end of the episode to cover a few of your different Opportunity Zone strategies beside just industrial. But let’s talk industrial now, Peter. So, the commercial real estate industry, as a whole, I would say faces some challenges here heading into 2023, kinda carrying over from the turbulence of last year, 2022. Record high inflation, rising interest rates, market volatility, transaction volume is down, right? But despite all of that, there are a few sectors that seem to show some promise, with some tailwinds helping to move them in the right direction. One such sector is industrial, logistics-based industrial in particular. That real estate sector has been really strong over the last few years, with the growth of e-commerce continuing to fuel its rise. Vacancy across that sector is very low, has been very low for many years. And but the concern might be, has industrial potentially expanded too fast? So, Peter, a lot to unpack here during our conversation today, but just to start us off at a high level, what else can you tell us about the industrial sector, and why is GTIS so bullish on it?

Peter: Well, we’ve certainly had a very good run in industrial, and really, pretty much all real estate, in the last few years. The pandemic turned out to be quite a supportive environment for real estate investing, probably because of all the capital that became available at cheap interest rates. Now the picture looks different, and the fallout, we believe, will impact different sectors and different markets differently. It really will matter a lot more going forward where exactly you are investing, and what you’re doing with your capital. There will undoubtedly be impact on the office sector. And we’ve been saying for quite a while that we’re probably looking at substantial value destruction there, unfortunately, with work-from-home keeping more than half of the workforce out of the office. When CEOs examine their lease obligations going forward, as leases expire, with only half of their people showing up, I’m sure the first item of expense to cut will be leases as they roll over, and we’re just starting to see that happen now.

Hospitality has had a pretty wild ride, with closures and then reopenings, doing really well right now, and industrial and residential have been the darlings. On the residential side, just real quick, there are some supportive tailwinds still, with not a lot of supply across most markets, and people who can’t really afford today’s interest rates looking to rent. So, we do think that the apartment sector will continue to do well, but industrial, in our mind, is actually the best-positioned to perform well even after the pandemic. And the reason for that is long-term structural constraints, or drivers, if you will, and I can talk about those in a little more detail.

But basically, the shift to e-commerce that happened during the pandemic is fairly permanent. We accelerated adoption of e-commerce probably by 10 years, having to go online during the pandemic. And when you use e-commerce channels rather than classic brick-and-mortar, you need more space in the warehouse. And then the scramble in the supply chains just creates need for more inventory. The shift from just-in-case to just-in-time inventory management that happened over the last two decades is reversing, and when you have more inventories, you need more space. That will continue. And so we’ll probably continue the geopolitical instability, unfortunately, which pushes a lot of companies to establish additional supply lines, not just from China, but from other sources. And that means you will need industrial storage distribution space in new locations, not just the ports of LA and Long Beach, but in southeast ports, and distribution hubs in the country, more generally. So, those, we think, are more permanent. And while we probably will see some kind of impact if the economy goes through a recession, no one can really escape that, the long-term picture for industrial, in our view, looks pretty bright.

Jimmy: Yeah, really interesting high-level insights there. And I know you have a lot more to say about this industrial real estate sector. So, in fact, you’ve even got some slides you wanna share. So, if you’d like to bring those slides up and kind of walk our audience through all of the different insights and trends that you’re seeing… And for those who may be listening to this episode on Apple Podcasts or Spotify or another podcast listening platform, this is gonna be a rather visual episode from this point forward, so I would encourage you to hop onto our YouTube channel, You can also find us on our website,, and find that YouTube video link, as Peter’s gonna take us through a little lesson in the logistics sector in the post-COVID world, I see on your screen right now, Peter. So, that looks great. And if you want to, please go ahead, and don’t mind me if I interrupt with one or two questions along the way, but I’ll let you tell us a little bit more about this sector and why you’re so bullish on it.

Peter: Sure. Please do interrupt. I just wanted to share a couple of slides about the performance of this sector. It’s been the best-performing asset class, bar none, except manufactured homes, which are really kind of a nichey property type. And even compared to apartments, which have done really well, industrial has really shot through the moon. And the question, of course, with that kind of setup, is whether that can continue, and we may see a little bit of a slowdown. But in our mind, there are drivers and fundamentals that still support it. If you look at the history, the 15 years or so since e-commerce adoption has driven our economy, more broadly, you can basically trace the history of industrial real estate here. This chart shows completions of warehouse space and the absorption of that warehouse space at the same time. And the light gray bars here that, you know, significantly exceed the completions for years, have basically led to a record-low vacancy.


If you have absorption in excess of what you can deliver to the market for such a long time, you end up with a tight market. And what used to be a 14% vacancy a decade or 15 years ago, today is less than 5% for industrial. Of course, the world has changed. Look at the Amazon and Walmart bubbles here. That’s their revenue. Back in 2010, when Amazon was just starting out, $34 billion of revenue, Walmart was the behemoth. Well, in 2022 was the first year that Amazon overtook Walmart in terms of total sales, $610 billion versus $566 billion for Walmart. And that’s comparing to the best, right? Because Walmart is still growing. It’s still there, while many of its peers have disappeared. And that’s the story. You know, shift from classical retail through e-commerce.

When you look at it in terms of rent growth, what a remarkable picture in the last few years. We’ve had rent growth of 17% and 25%, just during the pandemic. The projections still show pretty solid, although single-digit numbers going forward. And if you look at it from a point of view of different markets, there is some divergence here. Obviously differences, but every single major market has had double-digit rent growth in the past two years. Some of the best-performing locations are ports around LA and New York, New Jersey, but you have quite a number of non-coastal markets as well that have become important distribution hubs. And so this is kind of the context of how the sector has performed in the last couple of years, but what is it that’s driving it forward? And it’s these three tailwinds, if you will. E-commerce, the shift from just-in-time to just-in-case inventory management, and the supply chain diversification. So, I’m happy to kind of dive deeper into all three of those, and also maybe address a little bit of why industrial is really good for Opportunity Zones.

Jimmy: Yeah. No, that sounds great. Let’s spend a little bit of time talking about each of those three different drivers. I guess I mentioned e-commerce in my intro. Even a guy like me understands that one pretty well. But what else can you tell us about e-commerce growth and how that has continued to… It seems like it doesn’t have much more room to grow, but correct me if I’m wrong.

Peter: Well, even if it doesn’t, frankly, COVID accelerated penetration of e-commerce by 5 to 10 years. Look at this interesting chart, right? You can see this massive runup in e-commerce sales growth that happened just as COVID started. And those gains are not gonna easily reverse, because habits are hard to break. And when the elderly, or really anyone who wasn’t really part of the digital economy were forced to go online to get all the necessities in their daily life through e-commerce, the habit was broken, right? You’re no longer going down to the pharmacy to get your medicines. You are now getting it online. And there’s really no reason for that to go back. So, I don’t think these gains will be given up. While, you know, e-commerce may not grow as fast as it has in the last two or three years, this is kind of a permanent advantage, that I think is here to stay.

Underlying that is the need for more space when you shift to e-commerce. This is kind of a simplified picture of the value chain, but at the top is a classic brick-and-mortar retail distribution, where you go from a large warehouse, through a distribution center, that then sends the goods to a store, and then a customer effectively comes and picks them up, buys them at a store. While the e-commerce chain is a little bit different, you have at least two additional steps here. One being the last touch, the last mile distribution center, as it’s become known, where the delivery, the two-hour window that Amazon now gives for some of their products, necessitates locations really inside the city. And those last-mile centers have to be built. There is not enough of them in most MSAs. And then you have the logistics of returns. In a store, you don’t often return stuff. With e-commerce, people have become very used to buying more than they need and returning it. And you need almost as much space for those return logistics as you need for the original purchase. So, at the end of the day, you end up with almost three times as much distribution space requirement for e-commerce compared to traditional brick-and-mortar. That’s what’s really driving it. And if you accelerate e-commerce, you accelerate the need for space.

Jimmy: Okay. Yeah. So, that kind of explains it then. You do need a heck of a lot more space for e-comm. What about that second driver, which was a change in inventory management? Tell us more about what you mean by that.

Peter: Yeah, well, it is really remarkable how efficient the enormously complex global supply chain had become before COVID. You could get goods from China really quite fast and really efficiently, and flow it through your warehouse operations, basically one door in, the other door out. But this precision and co-dependence also made it very vulnerable, this entire supply chain. And so with the breakdown during COVID, what we are seeing now is a switch from just-in-time inventory management. This is big companies trying to manage their goods. They’re switching from just-in-time to a just-in-case kind of model, in a new world where suppliers need to make sure that they have product on hand when and where it’s needed. So, it’s a pretty simple idea, but it had become so efficient. You can look at it in the statistics, over a decade, starting in the mid-’90s, the inventory ratio, basically, the amount of goods you keep on hand, was going down pretty dramatically.

You would keep, you know, maybe two times the amount of goods you need to sell in any given month, back in the ’90s. That came down to just 1.3 times, very lean management of the inventory. But look what happened during COVID. All of a sudden you had these wild swings of what you need in order to manage your retail operations, and that’s causing retailers, managers, industrial suppliers to keep more stuff on hand. And when you store stuff, you need space for it, right? Just last quarter, Ford, the car manufacturer, revealed that they were storing 45,000 SUVs that have already been pre-ordered, but they can’t get foam for the seats. That’s the supply chain going all the way back to Asia. And you can’t sell and deliver the car if the car doesn’t have seats, right? So, they’re sitting somewhere, 45,000 of these vehicles.

Jimmy: That’s incredible. So, it looks like the trend started reversing there, pre-COVID, maybe around 2013 or so, when it started trending back upward. Any reason for that? Or is that just a natural kind of rebound from the trend?

Peter: I think that’s when retailers really came to terms with their what they call omnichannel distribution model. You know, distributing both through stores and through warehouses. There probably isn’t a lot to ascribe to that trend between 2013 and 2019. That, to me, looks more or less like a flat line.

Jimmy: Yeah. A little more like a little bit of noise maybe, and then, but clearly, a huge spike and then drop-off.

Peter: Exactly.

Jimmy: And a huge disruption starting toward the end of, I guess the beginning of 2020, really, is what we’re looking at there. Yeah.

Peter: Exactly. Yep. That’s what we’re talking about. When you see that kind of volatility, it’s like a snake, and it needs to get through the snake. And you just will need more inventory on hand, so you don’t…

Jimmy: Yeah. When you need more inventory, you need more space. So it further compounds that first driver that you were discussing. And what’s the, I guess, just to kind of, to compare it to another sector, in multi-family, I always bring up a statistic that we’re short roughly three or four or five million affordable housing units in multi-family. That’s a pretty well-cited statistic, depending on who you’re asking, which source you’re going to, and how you define affordable, we’re short about that many. Is there a comparable statistic in the industrial sector? How short are we on millions of square feet or whatever you wanna use for industrial. Or am I cutting to the chase?

Peter: Well, that is the question, and we do have some answers, but, you know, it’s a little unclear because it’s not only about how much you need in total, but where do you need it, right? So, you have some idea from Prologis, the largest owner of logistics space out there, who say we may need an additional 800 million square feet globally. They manage global supply networks. CBRE, a research shop, say about maybe 200, 300 million square feet just in the U.S. So, the answer is in hundreds of millions of square feet. And even a very large warehouse is about 1 million to 2 million square feet. So, if we’re talking about 300-plus of those, we’re talking about a pretty big number. But again, it depends where, right? There is quite a lot of inventory in traditional distribution hubs around LA, around Chicago, around Dallas.

That’s where goods have been flowing for a long time. And I wouldn’t say there is necessarily a shortage of space in those locations, but you have new corridors for distribution that have really come alive during COVID and in the last few years, where there really isn’t much inventory at all. If you look at the size of the bubbles here, that’s the size of modern warehouse space, if you will, in these different markets. And the bigger the bubble, the more warehouse space there is. Well, look at the Southeast, where we’ve had a lot of population growth, and where frankly, a lot of residential investment has been focused. When you have rooftops, when you have people moving somewhere, e-commerce and general retail follows. You will need that warehouse space.

A few years ago, in our strategic planning sessions, we threw out the old model of building residential and retail together. You know, when you do a master-planned community, you think of how many homes you’re building, and then what should be the corner retail center? What should we put there in order to provide the necessary retail for that community? Well, that’s really kind of changed in the last 5, 10 years. And when we build a new community, we are now asking how much warehouse space do we need somewhere close by in order for that community to be well-supplied with what it needs. And the third driver, in fact, that I mentioned, is actually informative in terms of the spatial distribution here. It’s about diversifying your supply chain from the, really, sole source that used to supply a lot of retail, which is China, to a number of different sources, in the context of COVID closures and the volatility that that has caused, with China closures in particular.

Jimmy: And just some other, non-COVID related geopolitical instability in different regions as well. So, yeah. Let’s dive into supply chain diversification, how this is driving increased demand for logistics warehouse space as well.

Peter: Yeah. Well, you know, for years, LA and New York were the gateways to the country. Everything pretty much came through the West Coast and the New Jersey ports. This chart shows the container cargo volume over time through major ports. LA is still the largest, for sure, but look at Oakland and Seattle. They’ve really kind of stagnated. There is not much more space in San Francisco to put warehouses or docks in that port. And so trade patterns have shifted, and this is what’s happened in the last few years. I superimposed the ports of Savannah and Houston and Charleston. Houston is the fastest-growing, and Savannah is now the third-largest container port, just over the last 5 to 10 years, overtaking Oakland, Seattle, Tacoma, and really coming close to New York and LA. But that’s not really where the warehouse space is. Going back to the map, look at how big the bubble is in LA and Inland Empire. There’s really nothing much around Charleston and Savannah here. Atlanta is a bit bigger, and a lot of trade now flows through Atlanta because there just isn’t a lot of warehousing in Savannah itself. But this is the place where population has grown, you know, Florida and the Southeast in general, and you just don’t have a big bubble down there. That’s where we’re focused with a number of our projects, in the Southeast.

Jimmy: Very interesting. Very interesting. So, I guess, now, that kinda leads me into a question that’s popping into my mind, which is, if so much of this is location-based, and hey, lo and behold we have this location-based tax incentive program called Opportunity Zones, can you tell us, I mean, unless you had something else to cover before we move into this topic, Peter, can you tell us how Opportunity Zones intersect with this need for industrial warehouse space in particular locations?

Peter: Sure. We think it’s one of the most interesting property types you can do in Opportunity Zones, and that’s driven both by the fundamentals here, which we think are positive, but also by the way that Opportunity Zones were defined and selected. If you recall, in our conversations over the years, we have been saying that Opportunity Zones were not all created equal, and they used pretty old data from 2010, which creates opportunities for places like Brooklyn or the LA Arts District, which used to be low-income, but over the last decade or so, have really become the hippiest places to go, to areas like universities, where there’s not a lot of household income, but are good places to invest. Well, the best place in this context are industrial parks. They have no households. So, if you take household income as a measure to define your community, you’re almost always going to end up with industrial areas being eligible for Opportunity Zone designation.

And so some of the most interesting prime locations for industrial distribution have ended up in Opportunity Zones because of how the measure was defined. And we have projects around major airports, seaports, and distribution hubs that take advantage of that, frankly. I’ll give you an example here. One of our projects in Goodyear, Arizona, which is part of Phoenix, the Goodyear Cargo Airport, where the Goodyear Tire and Rubber Company used to be based, that’s where it comes from, is now a large industrial park, with the likes of Amazon and Quetico, which is a big 3PL distribution company. And it became designated as an Opportunity Zone because you don’t see any houses here, no households. They are over, you know, on the other side here, but right by the airport, everything is an Opportunity Zone. We had a warehouse, a piece of land there, that we were able to develop into a project that serves as the distribution center for HelloFresh. I’m sure you’ve heard of the company that distributes frozen food. And this Opportunity Zone, today, is basically the e-commerce hub for all of Phoenix. The Amazon warehouse is the size of 50 football fields. It’s just an unimaginable scale. For someone who would be transplanted from the year 2000 and see this, it’s quite a sea change. So, that’s an example. The entire airport there, the cargo airport, is designated as an Opportunity Zone, with all these commercial applications and all these distribution companies setting up base.

Jimmy: Fascinating, fascinating. So, yeah, I mean, you’re making a pretty strong case for industrial, and particularly industrial in Opportunity Zones. There’s enough of these Opportunity Zone locations strategically located, by chance, perhaps, in some of these corridors that need more industrial warehouse space. Why to date hasn’t there been more investment in industrial in Opportunity Zones? You know, like, just about every fund that I see has some sort of residential focus or multi-family focus. There’s a few here and there that do some other stuff, but it seems like by and large, multi-family, or some other sub-sector within residential, gets a lot of the attention of Opportunity Zone equity. Why is that? And do you expect that to change over time, possibly?

Peter: It is a little puzzling, actually. I think it’s probably driven by the general market, and how strong residential has been in the past few years. So, probably just by the token of, you know, residential driving the general market, Opportunity Zones were a part of it. But I think we will see a shift. I think industrial will be on more people’s radar going forward. I hope not too many, because we do not want too many competitors. It is also an area that is a little bit more concentrated. The biggest owners of industrial space, like Prologis, do control a lot of the inventory. So, it’s a little harder to compete sometimes, but that really doesn’t, you know, mean that there are no opportunities, and I would expect a lot more of them to come online in the next couple of years, within Opportunity Zones, and outside.

Jimmy: How big is the industrial market overall compared to some other major real estate sectors, such as retail and hospitality and residential? Where does it fit in, in terms of overall market size or market capitalization?

Peter: That’s a great question, and I don’t have the precise answer, but residential is the largest by far, in terms of asset classes. Second one is actually office. And so, industrial is somewhere along, you know, second or third place, ahead of hospitality or other niche-like properties.

Jimmy: Yeah, and that’s interesting. So, office is number two right now. Maybe that’s gonna change over the coming, 5, 10, 15, 20 years, as a generation from now, who knows what those will look like, but it seems like industrial has some tailwinds, office is facing some challenges, as you mentioned several minutes ago, Peter, with the whole role of the office and how people work has changed quite a bit, and especially in the wake of the pandemic. Just a few other questions for you, Peter, before we cut you loose today. Thanks so much for sharing those slides. I think those were great. I’d love to get you and GTIS back on the podcast at a future date, or some of my other events. You know, just to kind of preview, I guess, what we might talk about on some other episodes, I know you guys do a lot more than just industrial. What other Opportunity Zone strategies do you focus on at GTIS? What else do you like? What other sectors are you bullish on here, as we sit here in early 2023?

Peter: Sure. We like residential in general, but particularly within residential, we are very active in single-family rentals. And that is a little piece of history as to how we came to it back in 2009 and ’10, when we started buying homes in foreclosure and at auction courthouse steps, basically. We had about 5,000 homes that we purchased out of distress. And because our capital was more patient, investing on behalf of pension plans and endowments, we thought, “Why don’t we actually rent these houses, and wait for the market to recover?” Most people buying at the courthouse were flipping them, getting a good deal on the purchase in foreclosure, maybe fixing them up, and selling the houses. But we thought it might be an idea to just keep them for a little longer. And lo and behold, it became a whole new asset class and a sector that today has hundreds of thousands of rental homes managed by large, publicly-traded REITs.

And we still like that strategy. Of course, you cannot buy distressed homes today, and I don’t think we will really see any distress even with interest rate going up and mortgage rates going up. I think that sector is in pretty solid shape right now. But what you can do to supply a tight market is to build houses for rent. And so we like the built-to-rent sector, where we have a dozen communities that are either being leased or in development, essentially delivering single-family rental homes in these locations. And if you can find an Opportunity Zone for single-family rental, that’s a perfect fit. You do need a rental asset for Opp Zones, and it is a little different than an apartment. It’s usually located in great places in the suburbs, with great school districts, but those are hard to find. There are not that many Opportunity Zones where you’re surrounded by, you know, $600,000, $700,000 homes. By definition, that doesn’t happen.

But we have a couple. And they kind of happened very luckily, in the sense that it was either a piece of desert back in 2010, or a location that the state really wanted to redevelop, and they put it on the list of Opportunity Zones. And today, what we built there is, you know, a new town center, for instance, at our project in Mesa, which is a large community of about 1200 homes. So, we like the built-to-rent sector. We do like apartments, selectively. You do need to watch for supply issues in some markets. We do not typically invest in hotels. It’s just too volatile. And we think that the office sector has some headwinds.

Jimmy: Yeah, no. Fair enough. Yeah, so, we do like, I know I was…I didn’t mean to bash multi-family or residential too much. It’s a sector that I like as well. Just curious why it was receiving so much attention and not enough from industrial. And as you mentioned, it is a little bit puzzling, but you guys, of course, do like residential as well, as do I, personally.

Let’s see, I mentioned Hackensack, New Jersey. You mentioned Mesa a moment ago. You know, Peter, you and I also did a tour of your property in Las Vegas, Nevada, near Symphony Park. I think that was about two years ago now. Besides those residential Opportunity Zone projects that you have in different phases of ground-up construction over the last few years, what other projects can you tell us about briefly? What other markets do you like? What other projects do you have cooking up?

Peter: Sure. We are delivering a couple of apartment projects in next quarter. So, I will be actually in Charlotte next week, where we have a beautiful apartment coming online in West Morehead. It’s a great location, about 15 minutes from uptown Charlotte. Just a very commutable and very nice class-A project, that will deliver much-needed housing in the area. The following week, or early March, I will be in Atlanta, where we have a warehouse project coming online, and we’ll be finishing our Seattle warehouse in late March, so I’ll be there as well. And that’s kind of the near-term schedule, but it’s a mixture of apartments and warehouses these days. It’s beds and sheds, as they say.

Jimmy: A good way of putting it. Peter, this has been great. I really appreciate all of the industrial knowledge, and a look into your Opportunity Zone strategy that you’ve given us today. Just to zoom out, for one of my last questions here for you, I’m considering that GTIS partners is a global leader, really, in the private equity real estate industry. What are some of the most powerful trends that you see playing out over the next few years across that broader private equity real estate landscape?

Peter: Well, I think we’ll have to watch the macroeconomic environment and interest rates, and what happens to what I call the stabilized real estate values going forward, particularly in office. That will be challenging. If the interest rate tightening cycle is coming to an end through what appears to probably be a mild recession, real estate will do really well. We kind of like mild recessions, because, even though the country slows down a little bit, real estate fundamentally keeps going. You know, your rents will keep increasing by a percent or two, even if there is a recession, because there is no huge vacancy. It’s the deep recessions, the ones that really cut into jobs, that worry us a little bit more, because then people start doubling up, living in their parents’ basement, as we saw in 2008. If the country is going through a mild slowdown for the next year or so, that’s a great goldilocks scenario for real estate, and the sector will outperform. When you look at the history of this asset class on a relative basis, everyone is impacted by a recession, of course, but on a relative basis, real estate outperforms in relatively mild recessions.

You know, our leases are written for a longer period, so even if we have a quarter or two of negative GDP growth, that doesn’t mean that our renters can come to our office and say, “Hey, can you decrease my rent because GDP growth is lower this quarter?” right? So, as long as it’s not deep and long, we keep getting the same rents or higher, and we will outperform other, you know, investment types, equities, and so forth. But it all depends. We’re all, at the end of the day, beholden to the big macro picture and where the country is.

Jimmy: We are, indeed. Peter, we’ve run out of time, but thank you so much for sharing your insights on industrial, on Opportunity Zones. We touched multi-family a little bit, and on the bigger macro picture as well. Before we go, Peter, where can our audience of high-net-worth investors and advisors go to learn more about you and GTIS partners?

Peter: Well, they can certainly go to our website, and here’s my contact information. They can reach out to me directly. I’d be happy to talk with advisors and investors. Our fund is a registered fund, and individual investors are welcome as long as they have accredited investor criteria. So, we do take individual investors. If you reach out to us, we’ll be happy to discuss it.

Jimmy: Perfect. And for our listeners and viewers watching or listening to the show today, we will have show notes available at There, we’ll have links to all of the resources that Peter and I discussed on today’s show, and I’ll make sure to link to the GTIS Partners website, as well as Peter’s email address. Also, please be sure to subscribe to us on YouTube or your favorite podcast listening platform to always get the latest episodes. Peter, it’s been a pleasure. Thank you so much. Thanks once again.

Peter: Great to be with you as always, Jimmy. Thank you so much for having me.

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