Monetary policy change could ‘stop the music’ quickly: Turcas

While there is currently a large amount of investment capital available in real estate markets ready to do deals in the value-add, core-plus and core tiers of the market, the record prices being paid in a few cases are dependent on end users being prepared to pay top rents as part of their quest to attract the best talent in their respective industries.

So says Guillaume Turcas, managing partner, Faro Capital Partners, who adds that the willingness of such occupiers to pay high levels of rent could easily switch if there is, for example, a change in monetary policy by the US Fed.

“The music can stop really rapidly and you can get stuck in some business plan where you have a higher rent to match to a low yield and the high price you’re going to pay now is not going to work in a two three four years, whatever your expectations are,” Turcas told Richard Betts of Real Asset Insight.

“I think the key question here is how far down the line the tenants are willing to go to pay the rents to attract talent.”

Click on the video above to watch the full interview or listen to the podcast below.