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Commercial real estate’s seismic transformation is creating new winners and losers

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There’s no doubt that commercial real estate, and especially the office market, is undergoing a seismic transformation, one that’s not likely to abate any time soon. A boom time of near-zero-interest-rate policy, abundant liquidity, and cap rate compression over the past decade has given way to a perfect storm–a wall of maturing debt, tightened lending conditions, and cratering property values–all amid higher interest rates that show no sign of returning to their pre-2022 lows. 

The outlook for the office sector has been particularly negative. It’s a tale of two markets right now: roughly 30% of office buildings account for 90% of the vacancies and may never recover, while the other 70% have the chance to stabilize over time. Either way, the office market finds itself at an inflection point, much like the retail market as mall acquisitions were being financed. 

It’s equally clear that this total reset won’t reverse itself any time soon as the cost of capital will remain elevated for the foreseeable future. Using a forward yield curve to track the U.S. 10-year Treasury, we can forecast yields rising from 4.46% in July 2025 to 5.78% in July 2035. Inflationary pressures will persist, and the historically accommodative monetary policy of the past decade will not spring back to life. The genie can’t be put back in the bottle. 

This dislocation creates gaps in the market. Banks are growing skittish towards their exposure to office real estate, and in May the Federal Reserve Bank of St. Louis reported that banks’ CRE loan growth had plummeted to an 11-year low. The Federal Reserve Bank of New York has publicly warned that CRE risks will weigh on banks’ balance sheets for years to come.

A special situation strategy for a special situation

Under these circumstances, it is “special situation investing” that will win the day. Special situation investing comes from the hedge fund world, where it means stepping into moments of market dislocation where traditional capital isn’t available because of complexity and distress. At Peachtree, not all distress is created equal: we differentiate between cyclical stress (e.g., a hotel that needs a bridge loan through renovation) and structural obsolescence (e.g., challenged office assets that may never recover).

There’s an enormous appetite for this type of flexible capital. The private credit market has grown by 50% in the past four years, ballooning to $1.7 trillion with no signs of stopping. (Morgan Stanley estimates the private credit market’s growth potential to leap to $2.6 trillion by 2029.) As banks grow increasingly wary of lending to CRE, private credit and special situations capital will no longer be sidelined as alternatives; the flexibility, speed, and dependability of these solutions will make them primary sources of funding. 

Where traditional lenders are pulling back due to balance sheet pressure and concerns about the health of the office market, special situations investors will fill the void with preferred equity, mezzanine debt, bridge loans, and rescue capital. Investors will position themselves as problem-solvers for banks and sellers by acquiring non-performing loans and purchasing distressed debt, often at discounted pricing. At a time when many investors lack operational bandwidth and expertise, those who can close quickly and manage properties directly will have the edge. And as skyrocketing insurance premiums, labor shortages, and taxes drive up property expenses sharply, every dollar that can be saved by rigorous underwriting discipline and operational efficiency becomes precious. 

All in all, the winners in this choppy period for the office market won’t be passive buyers or those who are still casting a backward look at pre-2022 conditions; the winners will be strategic operators willing to step into the gaps created by CRE’s seismic shift. Making lemonade out of lemons in this difficult environment will require keeping one eye on capital markets complexity and another on property-level operational challenges–and it will necessitate a willingness to fill the market’s gaps. 

The entry points for special situations investors are attractive ones, and we’ll continue to see plenty of buzzy headlines about private credit as the newest “shiny object” on Wall Street. But make no mistake: most firms that have jumped on the private credit bandwagon recently lack the necessary infrastructure and true expertise to execute effectively. The investors who have spent years building durable and battle-tested teams across all cycles, good times and bad, are the ones who are prepared to reap today’s rewards.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

Fortune Global Forum returns Oct. 26–27, 2025 in Riyadh. CEOs and global leaders will gather for a dynamic, invitation-only event shaping the future of business. Apply for an invitation.



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‘I had to take 60 meetings’: Jeff Bezos says ‘the hardest thing I’ve ever done’ was raising the first million dollars of seed capital for Amazon

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Today, Amazon’s market cap is hovering around $2.38 trillion, and founder Jeff Bezos is one of the world’s richest men, worth $236.1 billion. But three decades ago, in 1995, getting the first million dollars in seed capital for Amazon was more grueling than any challenge that would follow. One year ago, at New York’s Dealbook Summit, Bezos told Andrew Ross Sorkin those early fundraising efforts were an absolute slog, with dozens of meetings with angel investors—the vast majority of which were “hard-earned no’s.”

“I had to take 60 meetings,” Bezos said, in reference to the effort required to convince angel investors to sink tens of thousands of dollars into his company. “It was the hardest thing I’ve ever done, basically.”

The structure was straightforward: Bezos said he offered 20% of Amazon for a $5 million valuation. He eventually got around 20 investors to each invest around $50,000. But out of those 60 meetings he took around that time, 40 investors said no—and those 40 “no’s” were particularly soul-crushing because before getting an answer, each back-and-forth required “multiple meetings” and substantial effort.

Bezos said he had a hard time convincing investors selling books over the internet was a good idea. “The first question was what’s the internet? Everybody wanted to know what the internet was,” Bezos recalled. Few investors had heard of the World Wide Web, let alone grasped its commercial potential.

That said, Bezos admitted brutal honesty with his potential investors may have played a role in getting so many rejections.

“I would always tell people I thought there was a 70% chance they would lose their investment,” he said. “In retrospect, I think that might have been a little naive. But I think it was true. In fact, if anything, I think I was giving myself better odds than the real odds.”

Bezos said getting those investors on board in the mid-90s was absolutely critical. “The whole enterprise could have been extinguished then,” he said.

You can watch Bezos’ full interview with Andrew Ross Sorkin below. He starts talking about this interview gauntlet for seed capital around the 33-minute mark.

This story was originally featured on Fortune.com



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Google cofounder Sergey Brin said he was ‘spiraling’ before returning to work on Gemini

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Google cofounder Sergey Brin thought retiring from Google in 2019 would mean quietly studying physics for days on end in cafés. 

But when COVID hit soon after, he realized he may have made a mistake.

“That didn’t work because there were no more cafés,” he told students at Stanford University’s School of Engineering centennial celebration last week, Business Insider reported.

The transition from president of Google parent company Alphabet to a 40-something retiree ended up not being as smooth as he imagined, and soon after he said he was “spiraling” and “kind of not being sharp” as he stepped away from busy corporate life.

Therefore, when Google began allowing small numbers of employees back into the office, Brin tagged along and put his efforts into what would become Google’s AI model, Gemini. Despite being the world’s fourth-richest man with a net worth of $247 billion, retirement wasn’t for him, he said.

“To be able to have that technical creative outlet, I think that’s very rewarding,” Brin said. “If I’d stayed retired, I think that would’ve been a big mistake.”

By 2023, Brin was back to work in a big way, visiting the company’s office three to four times a week, the Wall Street Journalreported, working with researchers and holding weekly discussions with Google employees about new AI research. He also reportedly had a hand in some personnel decisions, like hiring. 

Skip forward to 2025 and Brin’s plans for a peaceful retirement of quiet study are out the window. In February, he made waves for an internal memo in which, despite Google’s three-day in-office policy, he recommended Google employees go into the company’s Mountain View, Calif. offices at least every weekday, and that 60 hours a week was the “sweet spot” of productivity.

Brin’s newfound efforts at work may have been necessary as OpenAI’s release of ChatGPT in 2022 caught the tech giant off guard, after it had led the field of AI research with DeepMind and Google Brain for years.

To be sure, Google for its part has been rising in the AI race. Analysts raved last month about Gemini 3, the company’s latest update to its LLM, and Google’s stock is up about 8% since its release. Meanwhile, OpenAI earlier this month declared a “code red,” its highest alert level, to improve ChatGPT. 

Brin added in the talk at Stanford that Google has an advantage in the AI arms race precisely because of the foundation it laid over years through its neural network research, its custom AI chips, and its data center infrastructure.

“Very few have that scale,” he said.



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Gen Z grads are now being given ‘resilience’ training at PwC U.K. to toughen up for the job

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Gen Z is often branded a “lazy” generation of workers with no ambition to climb the corporate ladder. But PwC U.K. says the real challenge isn’t motivation—it’s resilience. These young professionals are eager to succeed in their own way, but the pandemic may have left them with gaps in essential skills. So the “Big Four” consulting firm is taking matters into its own hands with “resilience” training for fresh-faced hires. 

“Quite often we are struck that the graduates [who] join us—who are meeting all the cognitive tests we’ve set—they don’t always have the resilience,” Phillippa O’Connor, chief people officer at PwC U.K., recently toldThe Sunday Times. “They don’t always have the human skills that we want to deploy onto the client work we pass them towards.”

“We’ve really doubled down, particularly [with] this year’s graduates,” O’Connor continued. “We’re doing a whole load of separate training in their first six months with us, really about resilience, really about some of those communication skills.”

The executive described resilience as the ability to handle day-to-day work dynamics—especially pressure, criticism, or sticky situations. That skill, she said, is particularly crucial in a deal-making environment, where managing challenges is a “core” part of the job.

According to O’Connor, many younger workers simply didn’t get the chance to build that muscle during the pandemic, when lockdowns disrupted education and early workplace experiences that would normally help develop it.

But by offering this special training, PwC is ensuring the talent that fills its 1,300 open U.K. graduate jobs this year—which received around 47,000 applications—are well-equipped to succeed. 

Fortune reached out to PwC for comment. 

Companies are offering Gen Z special training 

PwC’s “resilience” training is just one example of how employers have been stepping up to ensure Gen Z is primed to succeed in the workforce. 

In 2023, fellow “Big Four” consulting giant KPMGsupplied extra instruction to its Gen Z hires. The business provided training for its graduate talent, out of concern they were struggling to adapt to professional life—particualry when it came to “soft skills,” how to give presentations, work in a team, and manage projects. 

The chief people officer of $1.5 billion data protection start-up Cohesity, Rebecca Adams, has also pushed for inter-generational cohesiveness. 

Earlier this year the executive led the charge to skill bosses in managing the young professionals, citing that Gen Z responds to feedback differently: “They want to know why, how—they want constant feedback.” On the flipside, she described having to teach “basic things” to young staffers that would mind-boggle their Gen X counterparts. 

“How do I manage my calendar? You actually have to accept the meeting request,” Adams explained toFortune in September. “You can’t just walk out of the meeting that you’re in because you have another one while it’s still going on.”

Charitable organizations are also stepping up to solve Gen Z’s professional pitfalls. Radical Hope is a nonprofit helping equip college students with essential skills including communication, interpersonal dexterity, and emotional intelligence. It began as a pilot program at New York University back in 2020, after experts noted “elevated anxiety, stress, and depression” among students within the previous years—and has spread to 75 college campuses so far.  

Liz Feld, the CEO of Radical Hope, hopes the Gen Z trainees will become adept in the skills “we all got growing up at the kitchen table.” Even the little things, like small talk, can be a challenge for the young hopefuls striving to one day succeed in the workplace. 

“They won’t ask someone, ‘Do you want to go to the dining hall and grab dinner, you want to go grab a beer, you want to go for a walk, you want to get a coffee?’” Feld told Fortune, adding that if someone says “no,” their confidence is crushed. “They internalize the whole thing. The face-to-face rejection is what they’re afraid of.”



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