Key Takeaways
- • Adam Gallistel, Co-CEO and CIO of CBRE Investment Management (CBRE IM), a USD 150 billion global asset manager, says real estate is emerging from a difficult three-year stretch that lagged technology and growth equities, with valuation resets and slowing supply creating attractive entry points.
- • Gallistel favors Europe over the U.S. on relative value, citing a 25% peak-to-trough valuation decline versus 20% in the U.S., less capital chasing deals (U.S. CRE attracts roughly 4.3x more capital relative to market size), and spreads closer to historical norms.
- • In the U.S., essential retail and strip malls stand out, with reasonable cap rates aligned with financing, the best supply-demand dynamics in 20 years, and landlords regaining pricing power after the retail downturn and COVID.
- • Gallistel sees retail capital as the major growth frontier in real estate, enabled by U.S. 401(k) access, but warns retail investors tend to buy at market peaks, so CBRE IM is taking a measured approach.
- • Gallistel expects consolidation of the middle market to accelerate, with GP secondaries growing as managers struggle to raise capital and LP secondaries remaining underdeveloped relative to private equity.
Summary
Adam Gallistel, Co-CEO and CIO of CBRE Investment Management, discussed global real estate investing, market resets and the future of the asset class in an ION Analytics fireside chat. CBRE IM manages USD 150 billion across public and private real estate and infrastructure markets. Gallistel joined CBRE IM in 2024 after more than a decade at GIC, the Singapore sovereign wealth fund. He said the last three years have been challenging for real estate relative to technology and growth equities, while infrastructure has held up better. Despite this, he remains optimistic about the next cycle, citing global valuation resets, discounts to replacement cost and slowing supply pipelines that should improve future pricing power.
Gallistel highlighted Europe as particularly compelling at present. European valuations have declined more than U.S. valuations, by 25% versus 20% from peak to trough, and less capital is chasing deals, with U.S. CRE attracting roughly 4.3 times more capital relative to market size. Spreads over risk-free rates are closer to historical norms than in the U.S., and occupier markets benefit from limited new supply. He noted that the U.S. remains the most liquid and least regulated market with strong execution advantages. Europe, however, requires local presence because of fragmented markets, languages and regulations, and CBRE IM maintains multiple offices across the continent. Hiring priorities include forecasting skills, deal-making ability and a balance of numerical rigor with people skills.
In the U.S., Gallistel pointed to essential retail and strip malls as a sector with reasonable cap rates aligned with financing, the best supply-demand dynamics in 20 years, and rents that have reset following the so-called retail apocalypse and COVID, giving landlords pricing power.
On secondaries, Gallistel said LP secondaries remain underdeveloped in real estate compared with private equity, while GP secondaries are growing due to capital-raising challenges. He cautioned that these transactions require careful governance to protect investors during exits. On distribution, he described retail capital as a major growth frontier, supported by regulatory changes such as U.S. 401(k) access, even though institutional allocations to real assets are already near targets and retail penetration is minimal. He warned that retail investors tend to be procyclical, with inflows strongest at market peaks, and said CBRE IM is balancing opportunity with fiduciary responsibility.
Looking ahead, Gallistel expects consolidation in the middle market to accelerate, favoring larger firms, and said investors increasingly demand both capital allocation expertise and operational excellence. He also described data collection as improving but so far producing few counterintuitive insights, and said his focus remains long-term fundamentals, including rule of law and economic stability, rather than day-to-day macro headlines.
Gallistel highlighted Europe as particularly compelling at present. European valuations have declined more than U.S. valuations, by 25% versus 20% from peak to trough, and less capital is chasing deals, with U.S. CRE attracting roughly 4.3 times more capital relative to market size. Spreads over risk-free rates are closer to historical norms than in the U.S., and occupier markets benefit from limited new supply. He noted that the U.S. remains the most liquid and least regulated market with strong execution advantages. Europe, however, requires local presence because of fragmented markets, languages and regulations, and CBRE IM maintains multiple offices across the continent. Hiring priorities include forecasting skills, deal-making ability and a balance of numerical rigor with people skills.
In the U.S., Gallistel pointed to essential retail and strip malls as a sector with reasonable cap rates aligned with financing, the best supply-demand dynamics in 20 years, and rents that have reset following the so-called retail apocalypse and COVID, giving landlords pricing power.
On secondaries, Gallistel said LP secondaries remain underdeveloped in real estate compared with private equity, while GP secondaries are growing due to capital-raising challenges. He cautioned that these transactions require careful governance to protect investors during exits. On distribution, he described retail capital as a major growth frontier, supported by regulatory changes such as U.S. 401(k) access, even though institutional allocations to real assets are already near targets and retail penetration is minimal. He warned that retail investors tend to be procyclical, with inflows strongest at market peaks, and said CBRE IM is balancing opportunity with fiduciary responsibility.
Looking ahead, Gallistel expects consolidation in the middle market to accelerate, favoring larger firms, and said investors increasingly demand both capital allocation expertise and operational excellence. He also described data collection as improving but so far producing few counterintuitive insights, and said his focus remains long-term fundamentals, including rule of law and economic stability, rather than day-to-day macro headlines.
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