Alternative Investing Report - January 7, 2025

*as of 1/6; Sources: S&P, BTC, FTSE, DJRE, CL50

Multifamily buildings represented 35% of commercial real estate sales volume in 2024, and this dominance is expected to continue in 2025. Buying demand remains strong, while supply increases are slowing down, as building completions are projected to fall by 15% this year. Rent growth is expected to hit 3-4% nationwide, with the Northeast and Midwest leading the way, though some Sun Belt markets are struggling with oversupply issues.

➨ TAKEAWAY: As multifamily construction slows, expect rents to grow at a quicker pace in the coming years, which should keep buying demand strong, despite higher mortgage rates. Those higher rates represent a double-edged sword for the multifamily market. On one hand, the higher cost of capital lowers market activity and keeps prices down, but on the other, it makes homebuying more difficult, creating more renters. Overall, 2025 should be a good year for the multifamily market, though there should be good buying opportunities in many markets for investors.

As less established venture capital firms have struggled to raise funds from traditional sources such as pension funds and endowments, they are turning to high net worth individuals and retail investors to fill the gap. More than 200 funds controlling nearly $400 billion in assets have been raised from private wealth since 2019, and those numbers will only grow going forward.

➨ TAKEAWAY: The private wealth demographic is expected to deploy $7 trillion to private market asset classes in the next decade, and it is eager to get venture capital exposure. As the democratization of alternative assets continues, expect more VC firms to target retail investors and for more opportunities to open up to the public.

In this episode of Smart Humans, Slava Rubin talks with Nectar co-founder and CEO Derrick Barker about investing into real estate debt, how to underwrite multifamily buildings and picking the next hot real estate market.

🪙 Bitcoin back above $100K: After falling close to $90,000 at the end of 2024, Bitcoin jumped by 4% to $102,000 and is up over 10% in the past week. Ethereum, XRP, and Solana also have posted double-digit gains in the same timeframe.

🤖 Robotics funding: Robotics-related startups brought in $7.2 billion in funds in 2024, a slight increase over 2023, as companies building humanoid robots like Figure and developing robot “brains” like Physical Intelligence had substantial funding rounds.

🎨 Regional auction houses: While major auction houses such as Sotheby’s and Christie’s posted declining sales in 2024, smaller auction houses in the UK actually saw increased sales, as the lower end of the art market showed signs of health last year.

🚜 Farmland market: The number of land listings are down 25% from the 2020-2023 highs, as demand is outstripping supply, and land values are largely being driven by investor interest.

🚘 ”Hoonitruck” for sale: A custom built truck for stunt driving that belonged to the racer Ken Block is being auctioned later this month at the Barrett-Jackson auction in Scottsdale. The truck reportedly cost $1.5 million to build and had previously been listed for sale at $1.1 million.

🏡 Australian property market: As the Australian dollar loses value versus the U.S. dollar, more Americans are eyeing property down under, with Melbourne leading the way, followed by Gold Coast, Brisbane, Sydney, and Perth.

The retail giant Party City announced its bankruptcy in late December, closing its nearly 700 stores nationwide. As a result, 695 leases are now up for auction in all types of markets across the U.S., ranging in size from 7,000 square feet to 46,000 square feet. Many are located in high-traffic shopping centers in both urban and suburban markets. The auction is likely to take place in early February, and there are likely to be some good opportunities for retail operators.