Repeated macro shocks and shifting demand patterns are keeping U.S. real estate investors in a prolonged reset as asset values and transaction volumes remain under pressure. Bain Capital real estate head Ryan Cotton says the disruption is pushing capital away from some traditional sectors and toward alternative assets with stronger structural demand drivers.
Highlights
- Bain Capital’s real estate head, overseeing $18 billion in assets, reports ongoing market disruptions leading to repricing, pulled deals, and slower transactions.
- Capital is shifting from traditional sectors like office, retail, and multifamily toward alternatives such as senior housing, self-storage, student housing, airplane hangars, and marinas.
- Alternative sectors now dominate the world’s 10 largest REITs, with platforms like Atlantic Aviation and Safe Harbor demonstrating strong investor demand and double-digit NOI growth potential.
Market shocks reshape investment strategy
As reported by CNBC, Cotton says the real estate market keeps getting hit by new disruptions just as it starts to regain balance, forcing investors into repeated periods of repricing and caution. He says that dynamic is contributing to late-stage value retrades, pulled deals and another slowdown in transaction activity.
Cotton, who oversees $18 billion in real estate assets under management at Bain Capital, says the market is still working through oversupply in several sectors linked to the era of extremely low interest rates earlier in the decade. He also points to changing demand patterns, with artificial intelligence influencing logistics, supply chains and office use, while also reshaping where wealth is created and spent.
He says Bain approaches the market as a long-term investor rather than a spot trader, using a 10-year lens to assess secular demand drivers for different property types. Under that approach, he says the firm is steered away from offices, malls and some multifamily markets facing out-migration or oversupply, and toward alternative or emerging real estate classes.
Alternative assets attract more capital
Cotton identifies senior housing, self-storage and student housing as established alternative sectors, while highlighting private airplane hangars and marinas as especially attractive opportunities. He says rising wealth, asset scarcity and supply barriers can support double-digit net operating income growth in those categories even as demand continues to expand.
He points to Atlantic Aviation, the second-largest private airplane hangar platform in the U.S., and Safe Harbor, the country’s largest marina platform, as examples of the type of assets drawing attention. Safe Harbor was bought by Blackstone this year.
Cotton says capital is steadily moving out of the traditional core sectors of multifamily, office, retail and industrial because of weaker structural demand drivers. He notes that alternative property types now account for most of the world’s 10 largest REITs, including segments such as data centers and senior housing, showing how liquidity and investor focus are migrating across the industry.
For navigation through the volatility, he invokes Benjamin Graham’s “Mr. Market” concept, arguing that investors should stay focused on creating value until pricing and sentiment stabilize. In his view, patient capital is positioned to benefit when the market eventually finds its balance and transaction activity resumes.
The latest update follows our earlier article on Big Yellow sale pressure as activists urged the UK self-storage group to consider strategic options.
This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.