Going by some of the headlines in response to the volatility and uncertainty around the U.S. and global economies, it might seem like a safe assumption that commercial real estate deal activity would take a pause. Yet the industry leaders gathered for the Capital Markets Spotlight panel at Connect Los Angeles 2025 made it clear that they remain quite active, albeit selective.  

Asked by moderator Marc Renard, executive vice chairman with Cushman & Wakefield, whether Canyon Partners Real Estate sees debt or equity offering the better risk-adjusted return, CIO Robin Potts replied, “I would say that the balance of risk and return profiles has been toward debt consistently over the past couple of years. It’s very easy to find opportunities where we can put out subordinate debt with significant value cushion, significant cash equity cushion and be earning a low- to mid-teens return profile and have a lot of things go wrong before we would be impaired.”  

On the equity side, “to earn that same return profile, you need to be right on your rent growth, you need to be right on your exit cap projection,” she added. “A lot of things have to come together to earn that same return profile. So in equity, we have to pick our spots very carefully. On the debt side, it just consistently feels like a wide margin for error with a good return profile.” 

A recurring observation of the past couple of years has been that sizable quantities of capital are waiting on the sidelines. Prior to the Liberation Day announcement of tariffs that added economic uncertainty to the picture, it seemed as though some of that capital was poised to go to work. “There was capital from all risk tolerances getting ready to pounce and lean in,” said Jonathan Watson, managing director with AEW Capital Management. “People were underwriting where interest rates were going to be long-term.”

The tariffs announcement “threw a wrench into the works,” said Watson. “But I still think there’s quite a bit of resilience. There’s a lot of capital that has been raised around various strategies. Not a lot of it has been deployed. Transaction volumes have been fairly muted across all asset classes for the past several years. And if there’s an investment opportunity that meets the criteria of an institutional standard, there’s no lack of bid sheets for it, in any asset class.

“Now the seller may not like the pricing and it may not end up transacting, but I think there are plenty of buyers, ourselves included,” he continued.

Some of those buyers are adapting their strategies to meet the current market. At Nuveen Real Estate, for example, “we have steered away from that trophy high-rise that’s on Main and Main in the urban center, and focused more on suburban assets” in value-add, and core plus, said Sean Gulian, director of acquisitions and dispositions, U.S. West housing.

He continued, “We have seven active buckets of capital for multifamily, and we’ve got three on the value-add side. We’re focused on finding ways to get a creative leverage today on those value-add deals, which we’ve been able to do.”

As Renard pointed out, “What we’re seeing is that value-add capital, opportunistic capital and core plus capital, can all compete for the same asset using different assumptions and wildly different return criteria.”