Here's what I've got for you this week.
- Stop looking at interest rates and consider the Dollar
Trump’s push for a weaker dollar to boost manufacturing clashes with the need for a strong dollar to attract capital and finance U.S. debt, creating uncertainty and volatility for CRE investors.
- Cores Real Estate - Sponsored
One of our clients just launched a small opportunistic deal in North Carolina that is already over 80% subscribed. Learn more here - and below.
- Podcast Episode 709: The #1 Mistake Investors Make in CRE
Learn how Chris Borden discovered that retiring from being CEO of a multi-billion dollar company led to opportunities in real estate investing.
Plus, a reminder of two main initiatives this year:
- Investors:
I'm looking for stable, light value add/core plus deals with accretive debt and well mitigated downside. Are you seeing that anywhere?
Join my little band of investors here.
- Sponsors and Capital Allocators:
Join the waitlist to get the exact system our clients have used to raise nearly $1bn in equity capital.
Join the waitlist here.
As always, please do not hesitate to email me directly if you have any questions.
Best,
Adam
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Dollar policy uncertainty means volatility for real estate
As a commercial real estate investor, you might not be focused on dissecting foreign exchange policy. But there’s good reason to be paying attention.
Because when the U.S. dollar moves, commercial real estate moves with it and, by questioning America’s long-standing ‘strong dollar’ stance and suggesting a shift toward a weaker dollar to boost U.S. manufacturing. the Trump administration is sending ripples through the market.
Here’s what it means for CRE investors.
[n.b. a ‘strong’ dollar means you can buy more foreign currency than with a weak dollar which makes buying overseas products cheaper but American products more expensive to overseas buyers.]
1. The Dollar’s strength is already in play
Despite some recent softening, the dollar remains historically strong. That’s partly due to high U.S. interest rates, which have attracted foreign capital into dollar-denominated assets including real estate. Investors from Europe, Asia, and the Middle East have been buying U.S. properties as they seek stability in a world where other currencies look shaky.
But Trump’s economic agenda could change this. His push for tariffs and protectionist policies creates inflationary pressures, which could keep interest rates high. And if the U.S. moves toward weakening the dollar, whether formally through something like the rumored ‘Mar-a-Lago Accord’ or indirectly through fiscal policy, foreign capital could dry up.
2. Is a weaker dollar good or bad for real estate?
If the administration successfully shifts the U.S. toward a weaker dollar, it could have both positive and negative effects on commercial real estate.
The Good: Foreign investment surge
A weaker dollar makes U.S. assets cheaper for foreign investors. This could trigger another wave of international investment into real estate, particularly in gateway cities.
The Bad: Inflation and higher borrowing costs
Real estate investors hate uncertainty (everyone does). A weak dollar typically means higher inflation, which forces the Federal Reserve to keep interest rates higher than they otherwise might be. Higher rates mean more expensive financing for real estate. That could slam the brakes on development projects and slow deal flow.
The Ugly: Cap rate compression risks
If foreign capital floods in, prime assets could see further cap rate compression, making already expensive properties even pricier. That’s great if you’re selling, but if you’re buying, you could end up overpaying for an asset that might be valued beyond its true fundamentals.
3. The ‘Mar-a-Lago Accord’
This is where things get foggy.
Trump’s team has floated the idea of a new Plaza Accord-style agreement (a 1985 multinational agreement to weaken the dollar), dubbed the ‘Mar-a-Lago Accord.’ The idea is to convince foreign governments to extend the duration of their U.S. Treasury holdings while allowing the dollar to weaken in a controlled manner.
The Problem?
This could shake confidence in the U.S. dollar’s role as the global reserve currency. If major investors start doubting the dollar’s safety, we could see major capital outflows, not just from Treasuries, but from real estate, equities, and other dollar-based assets.
For CRE, this means:
Potential liquidity crunch:
If capital flees U.S. assets, lending could tighten, making financing deals harder.
Volatility in property values:
The uncertainty around currency policy could make underwriting real estate deals more complex.
Institutional hesitancy:
Large funds and REITs may pause acquisitions if they believe the policy landscape is unstable.
4. Should real estate investors be adjusting their strategies?
Yes. Smart investors don’t sit back and hope for the best. They adapt. Here’s how:
Hedge Against Inflation
If Trump’s policies lead to a weaker dollar and persistent inflation, assets with strong pricing power, like multifamily housing, industrial properties, and necessity-based retail, will outperform. Investors should focus on cash-flowing properties with rent escalations built into leases.
Look for foreign buyer trends
A weaker dollar will likely bring in foreign capital. Real estate owners should anticipate this and position assets to appeal to global buyers, particularly in prime gateway cities.
Lock in financing early
If the dollar weakens and inflation rises, borrowing costs will follow. Investors should lock in long-term fixed-rate debt now rather than waiting for rates to spike.
Watch for policy shifts in real time
While Trump’s team talks about currency manipulation, it’s unclear if they’ll actually move forward with a full-scale dollar weakening strategy. Real estate investors need to track these developments closely because policy uncertainty creates both risk and opportunity.
Final Take: The Dollar isn’t just our currency; it’s what makes or breaks the CRE markets
Most investors don’t think much about currency policy when making real estate decisions. But Trump’s economic strategy could make foreign exchange one of the biggest CRE drivers in the next four years.
If the dollar weakens, foreign buyer activity will increase, inflation could pressure cap rates, and borrowing costs could reshape the financing landscape.
The best investors? They’ll see these shifts coming and position themselves to win.
It’s one of those things we don’t add to the risks section of our offering docs but now’s the time to watch the dollar as closely as you watch the Fed because the next big move in commercial real estate might come not from interest rates or supply and demand, but from the currency markets themselves.
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I'm looking for CRE investment opportunities with mitigated downside despite all the current market uncertainty. If you'd like to join me, please complete this form, and I’ll be in touch.
Thanks all,
Adam