We had a chance to speak with Chris Rising, the President & COO of Rising Realty Partners and a Fundrise investor. With over $318 million of assets under management, RRP is currently renovating the historic PacMutual campus in Downtown Los Angeles and 87 N Raymond in Pasadena, CA.
What are your biggest takeaways from 2015?
Across the country, costs are going up and, in some major markets, are commensurate with rising rents. It seems pretty clear that the economy is heating up again and it’s being reflected by an increase in construction costs and rental rates.
What markets are you investing in?
I am excited about what will happen in California in 2015. Though the Bay Area is already pretty heated, I think there is major potential in the southern markets, like Orange County, Los Angeles, and San Diego.
Additionally, I look forward to watching how other “smart cities”, such as Seattle, Salt Lake City, Portland, Denver, and Raleigh-Durham, develop in the year ahead. We expect that regions with a large millennial demographic, with strong local universities and great quality of life will continue to be good places to invest.
Which sectors look promising for the year ahead?
The office sector is going to continue to be strong. We will see the industry continue to shift from fewer large tenants to more small tenants as coworking facilities continue to pop up.
I think we will start to see acquisition and consolidation within the coworking market. Every major “smart city” will have several coworking options and a person will belong to one, similar to a gym membership, and that will provide the ability to work in multiple locations in a city or around the country.
Outside of the office market, I think the for-sale housing market will continue to improve, as well. I think there will be changes with this new Congress that will ease restrictions for buying both single family and condos. I think industrial will continue to be a strong investment sector and that new development will provide opportunity.
What do you think will happen this year that would surprise most people?
Interest rates are going to continue to stay low.
There will be some sort of event in the financial industry that scares people, but it will be a blip. Unless there is a global event, I believe interest rates stay low through 2015.
As an early investor in the real estate crowdfunding space, where do you think the industry will be by the end of 2015?
On the regulatory side, I think we will see new rules come into play that will propel the growth of the space. The SEC has been very slow to provide the guidelines, I think the rules will not only be in place, but a working comfort will develop by year end.
More real estate companies will start to see crowdfunding as a viable capital source, particularly for providing flexible equity. It will also help launch some new developers.
Fast forward to December 2015. How do things look?
Things are very hot. Too hot. The end of 2015 starts to look a lot like end of 2006 maybe even 2007.