Anthony Dilweg, veteran real estate investor and Founder & CEO and of Dilweg, joins Forward Guidance to share shocking information from the world of commercial real estate (CRE) in general and office in particular. Dilweg, whose firm owns over 5.5 million square feet of real estate, mostly located in the Southeast United States, argues the challenges CRE will contend with may be greater than those faced during the 2008 Great Financial Crisis (GFC). Dilweg’s base case is that office as an asset class is structurally broken as the trends of remote and hybrid work are here to stay. He expects over a billion square footage of U.S. office space will be rendered obsolete in the coming years. With all these challenges notwithstanding, Dilweg is optimistic that there will be great investment opportunities for well capitalized players who can take advantage of market distress. Filmed on November 29, 2023.
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About Dilweg: https://www.dilweg.com/
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.
Timestamps:
(00:00) Introduction
(00:19) Dilweg's Background in Football and Real Estate
(04:10) Dilweg's Start In Real Estate: "Ready, Fire, Aim"
(09:00) Office Is The Most Capital-Intensive Sector Of Real Estate
(12:15) Interest Rate Surge Has Been A "Jolt To The System"
(20:30) Office Is Structurally Broken Right Now
(34:10) It's A Lot Worse Than The Headlines
(43:10) Lease Term: Comparison To "Duration" In Bond World
(44:10) Interest Rate Hedging In The Real Estate Business (Public REITs and Private Investors)
(45:00) Are Office Rents Going Down?
(50:35) Dilweg's Forward Outlook On Returns
(53:10) A Lot Of Properties Will Go Back To Banks
(01:09:00) Dilweg's Outlook on Commercial Real Estate (CRE) Other Than Offices
(01:14:50) The Rise Of Experiential Hospitality
(01:17:50) WeWork & Adam Neumann
(01:23:00) Dilweg's View on Office Markets In Big U.S. Metropolitan Cities
(01:29:10) The Work-From-Home Debate
(01:46:00) The Rise of Private Credit