Founded in 1986, Cohen & Steers is a leading global investment manager specialising in real assets and alternative income solutions.

Cohen & Steers is globally recognised as a pioneer and leader in real estate securities and liquid real assets in terms of our longterm performance, assets under management, range of portfolio strategies offered, and the experience and depth of our investment team rooted in fundamental-driven research and portfolio management processes. As of 30 June 2024, the firm has $80.7bn AUM, with $58.1bn in listed real estate.

Our core values of excellence, innovation, focus, and inclusion have remained consistent for 38 years and have guided our decisions, ensuring consistent results for clients, shareholders, and employees.

With a team of 400+ professionals, our global presence is felt across three continents, spanning six offices. Our culture, steeped in excellence and inclusion, fosters decision-making, nurtures emerging leaders, and ensures our continued contribution to our clients’ success.

Investment principles & strategy

  • Listed Real Estate: we are the pioneer and world’s largest active investor in global real estate securities, sourcing alpha through unmatched depth and breadth of coverage and rigorous fundamental research. The architecture of our industry-leading investment platform, which emphasises deep local research, a common process and global integration has over decades demonstrated its scalability and adaptability and helped us in our goal to deliver sustainable outperformance across our entire platform of strategies. We offer probably the widest suite of global and regional strategies designed to meet different investor needs and preferences, for example around concentration and alpha targets or sectoral focus. We also offer enhanced strategies that incorporate derivative overlays, for example to manage volatility and reduce downside risk, or to provide a stable and enhanced income. We further mange customised strategies and completion portfolios to meet specific investor requirements.
  • Private Real Estate: investing in the small and medium sized transaction market with a focus on value-oriented investment themes, our dedicated Private Real Estate Group has extensive experience sourcing, underwriting and executing investment opportunities, leveraging a robust network of best-in-class specialised operating partners. Integration with our listed investment team creates unique insights and affords proprietary access to entity-level pre-IPO and PIPE deals, together with advantageous relationships with REIT operators. We currently offer US-focused core plus and opportunistic equity strategies.
  • Our dedicated Real Estate Research & Advisory practice, which monitors valuation signals across public and private markets, offers expert perspectives and partners with our clients to help them to exploit relative value opportunities and optimise their allocations strategically and tactically. Moreover, by investing across both listed and private real estate, we are able to build and manage comprehensive investment solutions.

Sector forecasts

INDUSTRIAL:

For nearly a decade, the industrial sector led the US in performance. As consumer companies increasingly adopted the direct-to-consumer business model, the demand for warehouses outstripped the supply available, which led to a spike in rent growth and encouraged investors to pay higher multiples (or lower cap rates) for assets. Demand from users and investors inflated the price of warehouses across the country and led to a development boom, which was exacerbated by a decline in interest rates that saw the 10-year Treasury yield fall from ~5% in 2007 to ~0.5% in 2020.

This outsize growth has begun to contract over the last 12 months, as the sector has become imbalanced in the opposite direction. Supply has been delivered to the market at a time when demand has started to falter. The stalling of favourable fundamentals led to a decline in transaction volume as buyers have had to rationalise a higher cost of capital.

The market is starting to work through this glut of supply, and transaction volume has risen from the bottom, but the future remains unclear.

Elsewhere, in Europe, e-commerce is no longer the key demand driver for industrial, though market penetration is still significantly behind in certain markets. Spain, Germany and Italy are expected to see largest such growth. Sweden and central Europe are likely to lag in growth for the next several years. The UK has high penetration but remains under supplied on a per-capita basis, which should represent a multi-year growth driver.

Within the Asia-Pacific region, the strongest sector fundamentals remain in Australia, with relatively low penetration and longer-term supply constraints.

OFFICE:

The office sector faces long-term fundamental challenges. In the US, prior to the COVID pandemic, the gateway markets had offered stable cash flow with long-term growth potential benefitting from barriers to entry, limiting supply. They had also held strong positions in certain careers, leading to population growth. Office markets experienced rental growth that leading to a development boom, with investors buying assets at prices that relied on growth.

Following the pandemic, improvements in technology had given employees greater mobility, while allowing them to keep their jobs, and so the strong positions of the gateway cities weakened. As employees moved, so did companies, often to areas that had a cheaper cost of living and an easier commute directed toward secondary markets across the Sunbelt and western regions.

As a result, the office sector is facing a secular decline; however, unlike in previous cycles, secondary cities have been leading the recovery, particularly in the Sunbelt region, given the tailwinds of employment and population growth.

Outside of the US, we expect less pressure on long-term growth for office landlords, given the lower commoditisation of supply and lower shift toward remote working. Markets in Europe face the challenge of repurposing office assets to attract tenants. Still, we have observed meaningful increases in vacancy, such as Tokyo’s, have seen an acceleration of demand, as decelerating supply trends and economic activity bolster fundamentals.

RESIDENTIAL:

The residential story in the US is similar to that of other darlings of the 2010s. As the millennial cohort graduated from college and moved to cities for their first jobs, they moved into apartments, which, when combined with a cheaper cost of financing, made multifamily one of the first sectors to recover its value following the global financial crisis.

Years of rent growth led to a development boom of apartments across the country, and investors similarly were found chasing performance and pushing prices.

Facing the new cost of capital with the more recent rise in interest rates, pricing for multifamily apartments has broadly declined, and will continue to do so. However, similar to last cycle, some markets will recover sooner as they are equipped with in-migration and job growth to consume new supply.

The millennial cohort, now with families, is moving into free-standing homes. After the global financial crisis, homebuilders were tentative to develop new properties, and so began a decade of undersupply in houses in the US.

Transaction volume is down in the housing sector as buyers have coped with the reality of new mortgage rates, and sellers have been locked into their homes with cheap financing. However, as rates are starting to stabilise, we expect buyers to re-emerge.

Single-family REITs are the newest entrants in US residential listed markets. The technical barriers to scale that had previously held back such businesses are no longer impediments, and we anticipate these companies will benefit from the demographic shifts.

Outside of the US, as more leveraged developers are forced to sell land and assets at discounted prices in Australia, we expect certain well-capitalised listed companies to benefit from attractive acquisition and development opportunities. In Germany, residential landlords have had success in deleveraging following previous growth at very low-interest rates, and they should continue to benefit from demand in large cities. We have long avoided allocation to the overleveraged property developers in mainland China.

RETAIL:

Unlike the other sectors, US retail went through its oversupply issue in the back half of the 2010s. Under threat of existence from e-commerce, retail real estate has largely been out of favour from investors.

Despite the lower interest rates for much of the last decade encouraging the development of new supply in other sectors, retail saw a rationalisation of overall square footage. As department stores’ desirability declined and retailers shifted more resources to warehouses/e-commerce, average-quality malls began closing, and retailers shrank their footprint, which led to flat/negative rent growth across the country.

That backdrop gave the sector the time it needed to repair itself. With no new meaningful amount of supply, a healthy consumer, and retailers finally creating omni-channel and BOPIS (buy online, pick up in store) distribution strategies that integrate physical properties, the sector appears to be the healthiest.

In 2024, that story, combined with the attractive yield, relative to the cost of debt and other sectors, resonates with investors. Transaction volume is returning, and we believe private markets for this property type are healthy. We are mindful of the impact of a potential slowdown in the economy.

In Europe, landlords have benefitted from indexing increases in rents due to inflation. Retailer sales and shopping demand have remained strong despite the macro headwinds. Asia retail markets have degrees of variation, with Japan having accelerated rental growth for discretionary retail landlords, whereas the savings rates in other parts of Asia have made us more cautious on sector performance.

Strategic corporate development

Cohen & Steers continues to innovate, build new capabilities, invest in our teams and culture and position the firm for growth in 2025 and beyond. The launch of two private real estate strategies is solidifying our position at the intersection of listed and private real estate. Our development of new and innovative extension strategies including risk-managed real estate, sustainable real estate, portfolio completion strategies, and others that integrate listed and private real estate represent investments we are making in the future. We are also adding to our teams around the globe to expand our investment and distribution capabilities to better serve our clients and continue to build our next generation of leaders.

COMPLIANCE STATEMENT

All information is as of June 30, 2024. This presentation is provided to qualified institutional and professional investors or their advisors only for informational purposes and reflects prevailing conditions and our judgment as of this date, which are subject to change. It does not constitute investment advice or a recommendation or offer. We consider the information in this presentation to be accurate, but we do not represent that it is complete or should be relied upon as the sole source of suitability for investment. Past performance does not predict future returns. Risks involved with investment, including potential loss of capital, are substantial and should be carefully considered.