Heitman

Between 2017-2024 brokers have observed the longest hard insurance market over the past 3 decades. In the face of these challenges, availability of coverage is not the foremost issue for investors in the CRE market; rather, the difficulties lie in securing affordable policies that will not adversely impact investment performance while providing adequate risk coverage. To manage rising premium costs and shrinking coverage, property owners are adopting various strategies, ranging from layering coverage or opting for a higher deductible, to alternatives such as aggregate deductibles, self-insurance, self-insured retentions (SIRs), captives, parametric coverages, and/or leveraging excess and surplus lines. To read more about how investment managers are securing more affordable insurance coverage, check out Heitman’s latest research with Urban Land Institute Insurance on the Rise: Climate Risk and Real Estate Investment Decisions. To read the full report, visit our website https://lnkd.in/geQiPCkt

Hear from Jeffrey S. Bingham, CFA, FRM, CAIA, Co-Head of Global Investment Research, as he breaks down the market's reaction to the US election results and explores how the incoming administration's policies could shape the future of real estate investment.

The NCREIF Property Index indicates that US commercial real estate prices as of Q2 2024 had depreciated by 18.5% since the Federal Reserve began raising interest rates in early 2022. While rising mortgage interest rates and high vacancy rates contributed to the decline, per NCREIF, insurance increases drove nearly 2% of revenue margin erosion for apartments over the last 4 years. Traditionally, CRE owners would budget a 2-3% annual increase in property insurance costs, however, 2023 witnessed a departure from this trend, with double digit rate increases affecting multiple property types across the US, including office. Read more about how real estate investment managers are managing rising insurance costs in Heitman’s latest research with Urban Land Institute Insurance on the Rise: Climate Risk and Real Estate Investment Decisions. To read the full report, visit our website https://lnkd.in/geQiPCkt

Over 30 years ago,Heitman recognized the benefits of adding alternative real estate sectors, such as self-storage and student housing, to create a broadly diversified value-added portfolio. Listen to Emi Adachi, Global Co-Head of Investment Research, share her insights on alternative sectors and their potential benefits in a portfolio. For more insights from Heitman on how alternatives may enhance a portfolio, visit: https://lnkd.in/eMy5vC5g #valueaddrealestate #alternativeinvestments #selfstorageinvestments #studenthousinginvestments

We did it again! Heitman has been recognized as a Best Place to Work in Money Management by Pensions & Investments. This marks the fourth consecutive year Heitman has received this prestigious recognition. Our culture is reflected in everything we do at Heitman, and this acknowledgment is further evidence that our efforts to foster a supportive, engaging, and inspiring workplace are making a positive impact. Thank you to our employees for all you do to make Heitman a great place to work! #BPTW #BPTW2024 #BestPlacestoWork FN: Presented by Pensions & Investments, the annual survey is dedicated to identifying and recognizing the best employers in the money management industry. All applicants paid a submission fee. Pensions & Investments, partnered with Workforce Research Group, a research firm specializing in identifying great places to work, to conduct a two-part survey to evaluate each company’s employee experience, workplace policies, practices, philosophy, systems, and demographics. The combined scores determined the top companies. Additional information is available at www.pibestplacestowork.com. A complete list of the 2024 Pensions & Investments’ Best Places to Work in Money Management winners and profiles is available at https://lnkd.in/ercrkMhv

Heitman has transacted across multiple cycles on more than $19 billion of value-added real estate investments in North America through commingled funds and separately managed accounts, honing its investment approach since 1992. The team constructs diversified and adaptable portfolios through development, redevelopment, and portfolio aggregation strategies in both traditional and alternative property sectors. Listen to Mike Trench as he discusses our experience in the space. Sign up to receive more of our insightful market trends: https://lnkd.in/g8m36ka4

Since 2017, US CRE property insurance rates grew by 7.6% annually. Those rate increases accelerated in 2023, with a year-over-year increase of more than 17% in some US markets. While all sectors are seeing increased insurance costs, the most dramatic increases are seen in the US multifamily residential sector, where costs rose at almost twice the rate of total operating expenses during 2021-2022. Moody’s found that the highest increases were in metro areas of Texas, the Sun Belt, the Northeast, and California with the multifamily sector being the most severely affected. While many factors contribute to rising premiums, the predominant driver is climate risk, particularly for areas prone to hurricanes. Read more about the impact of climate risk on insurance premiums for CRE in Heitman’s latest research with Urban Land Institute Insurance on the Rise: Climate Risk and Real Estate Investment Decisions. To read the full report, visit our website https://lnkd.in/geQiPCkt

The US has a notable impact on the global insurance and reinsurance markets due to its extensive use of insurance for risk management. In 2023, US losses accounted for the highest number of billion-dollar disasters, with 28 separate weather and climate disasters costing at least $1 billion. In 2024, through early-September, there have been 20 confirmed U.S billion-dollar weather and climate disaster events. The growing frequency and intensity of catastrophic events has translated into rising losses for reinsurers and corresponding increases in insurance rates for commercial property owners. Read more about how investment managers are managing rising insurance costs in Heitman’s latest research with Urban Land Institute Insurance on the Rise: Climate Risk and Real Estate Investment Decisions. To read the full report, visit our website https://lnkd.in/geQiPCkt

Listen to Jeffrey S. Bingham, CFA, FRM, CAIA, Co-Head of Global Investment Research, as he explains how the new administration’s policies could stimulate short term growth, with consideration of possible longer term consequences.

Rising insurance costs stem from a variety of factors including inflation, the cost of reinsurance, regulatory restrictions, and the higher frequency and intensity of weather-related claims. As disasters continue to increase in frequency, intensity and cost, it’s likely that insurance costs will continue to pose a challenge for the real estate sector. Read more about how rising insurance costs are impacting real estate investment managers in Heitman’s latest research with Urban Land Institute Insurance on the Rise: Climate Risk and Real Estate Investment Decisions. To read the full report, visit our website https://lnkd.in/geQiPCkt