# Understanding Real Estate Markets: Capitalize on Down Commercial Real Estate Markets

An episode of [Earn Your Leisure](https://invisiblenetwork.ai/podcast/1450211392), 24 Mar 2026, 6:08.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/8dbc4f54-a337-4481-9ef2-b355012b0a3d/e27fb403-2028-4768-b3c7-b41400c1abbd/audio.mp3?utm_source=Podcast&in_playlist=eac4c628-29cb-469a-b5c8-b355012b0a48

Welcome back to another insightful clip of Market Mondays! In this clip, hosts Troy Millings, Ian Dunlap, and Rashad Bilal sit down with veteran real estate mogul Don Peebles to discuss the current state of the commercial real estate market and strategies to thrive during downturns. See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: Let's say if someone sees an opportunity in la or
[0:02] Speaker 1: Detroit and they want to group get a group of
[0:04] Speaker 1: investors together, what steps would you have them take to
[0:08] Speaker 1: make sure that they are buying the right area and
[0:11] Speaker 1: that that building will actually be a success and they
[0:13] Speaker 1: won't go into debt. I try to acquire a property
[0:15] Speaker 1: while the commercial real estate market is down.
[0:18] Speaker 2: Well, I think they got to look at what the
[0:20] Speaker 2: other uses are. So, for example, in a office building market,
[0:25] Speaker 2: vacancy rates at you know, ten percent or below mean
[0:28] Speaker 2: that's a healthy office market. There are very few markets
[0:31] Speaker 2: in the country where that's the case. Miami is probably
[0:34] Speaker 2: one of them, Miami Beaches the second one. I think
[0:37] Speaker 2: there are very few like that. So then you look
[0:39] Speaker 2: at are what's the apartment vacancy rates and the apartment
[0:44] Speaker 2: vacancy rates, what are they running? And if they're running,
[0:46] Speaker 2: you know, vacancy rates on the apartment side, that is,
[0:50] Speaker 2: you know, maybe somewhere in the neighborhood of you know,
[0:53] Speaker 2: five percent vacancies and that's a healthy market. And in
[0:56] Speaker 2: places like New York, uh and and DC and even
[1:01] Speaker 2: Miami to a degree, these vacancy rates are even less
[1:05] Speaker 2: so New York's vacancy rate is less than two percent,
[1:09] Speaker 2: so that would mean it's very conducive to having new apartments.
[1:14] Speaker 3: And then once you look at vacancy.
[1:16] Speaker 2: Rates and you look at rental rates, and if the
[1:18] Speaker 2: rental rates, you know, can support the acquisition and the
[1:22] Speaker 2: conversion of a new building, then it makes sense to
[1:26] Speaker 2: do because you've got strong rental rates that are supported
[1:29] Speaker 2: financially and vacancy rates are low, which are showing a
[1:32] Speaker 2: significant demand. And same thing with hotels. I mean you
[1:35] Speaker 2: can look at converting office buildings in the hotels as well,
[1:38] Speaker 2: and so but it's these conversions are not for inexperienced people.
[1:43] Speaker 2: So they've got to make sure that they get a
[1:45] Speaker 2: contractor that understands conversions and architects that understands conversions. And
[1:51] Speaker 2: then if they're going to do something to scale themselves
[1:54] Speaker 2: as a group, then they want to hire a season
[1:57] Speaker 2: construction project manager that works for the owner with the
[2:00] Speaker 2: investment group and who has experiencing conversions as well.
[2:05] Speaker 4: So to build this Scots paper in New York like estimate,
[2:09] Speaker 4: how much would that cost?
[2:11] Speaker 3: About three billion dollars?
[2:13] Speaker 4: Okay, so how do you how do you go about
[2:15] Speaker 4: securing financing for these large scale projects.
[2:20] Speaker 3: Well, it's interesting. So the way you do this is
[2:22] Speaker 3: you go to a you.
[2:23] Speaker 2: Know, a group of banks normal you know, the traditional banks,
[2:27] Speaker 2: the JP Morgan Chases, the Bank of America's, you know,
[2:31] Speaker 2: the wealth banks, and so forth, and you go to
[2:33] Speaker 2: those banks to get senior financing. And that's a senior loan.
[2:37] Speaker 2: And normally you're going to borrow between sixty and seventy percent.
[2:41] Speaker 2: So let's use just for simple math that you know,
[2:44] Speaker 2: you're going to borrow seventy percent, so thirty percent is
[2:47] Speaker 2: going to be equity, and so thirty percent is nine
[2:49] Speaker 2: hundred million dollars so by affirmation towers. So then you're
[2:53] Speaker 2: going to go to a large global institutional, you know,
[3:00] Speaker 2: an equity fund, and you're going to go to maybe
[3:03] Speaker 2: a couple of them, and they are going to put
[3:06] Speaker 2: in somewhere between eighty percent or so of that you know,
[3:14] Speaker 2: nine hundred million dollars. So that would mean that the developer,
[3:18] Speaker 2: our team would have to put in ten percent, which
[3:22] Speaker 2: would be ninety million to twenty which is one hundred
[3:24] Speaker 2: and eighty million dollars, and.
[3:26] Speaker 3: So our group would put that up.
[3:28] Speaker 2: Most likely we would bring in a institutional general partner.
[3:35] Speaker 2: They would come in and they would put in half
[3:38] Speaker 2: of that or a little more. And so the developer
[3:41] Speaker 2: you know, generally going to put in between fifty and
[3:43] Speaker 2: one hundred million dollars between our growth.
[3:48] Speaker 5: So when you're approaching, obviously Affirmation Tower is a huge project,
[3:52] Speaker 5: but I know hospitality is something that you're well versed
[3:54] Speaker 5: as well. Last time we spoke with Uiou, you were
[3:58] Speaker 5: talking about developing hospitality throughout maybe the Caribbean.
[4:01] Speaker 3: What's the approach there, because it's it's.
[4:03] Speaker 5: Is it completely different when when you're trying to develop
[4:06] Speaker 5: in that space.
[4:08] Speaker 3: Not really.
[4:08] Speaker 2: In fact, Affirmation Tower is going to be residential. If
[4:11] Speaker 2: we get to build it, it will be the Civil
[4:13] Speaker 2: Rights Museum, and then it'll be two it'll be residential
[4:18] Speaker 2: rentals with affordable housing for then it will have two hotels,
[4:29] Speaker 2: you know, a boutique hotel and then an ultra luxury hotel,
[4:34] Speaker 2: and then above that on the top floors it'll have
[4:38] Speaker 2: luxury condos and then an observation deck on the roof.
[4:41] Speaker 2: So there's a big mixture of uses because the building
[4:43] Speaker 2: is a very big building, you know, a few million
[4:46] Speaker 2: square feet, and so mixing up the uses it's like
[4:48] Speaker 2: consider a building being like a neighborhood. Almost the building
[4:52] Speaker 2: of that size is, you know, like a neighborhood. You know,
[4:54] Speaker 2: so you're going to have a mixture of uses in
[4:57] Speaker 2: that building, and that, you know, helps drive the economics here.
[5:00] Speaker 2: If you're going to do a one off hotel, then
[5:03] Speaker 2: there the process is different because the first thing you're
[5:06] Speaker 2: going to need to do is determine who's going to
[5:08] Speaker 2: operate the hotel, who's going to brand, who's going to
[5:10] Speaker 2: operate it. And I wouldn't recommend building a hotel of
[5:14] Speaker 2: any type, you know, from either a three star or
[5:18] Speaker 2: a five star hotel. I wouldn't do it without a brand.
[5:21] Speaker 2: And then given that you know normally it's a real
[5:24] Speaker 2: estate entrepreneur who is building it, then you want a
[5:28] Speaker 2: brand to be able to manage the hotel to or
[5:31] Speaker 2: to hire a third party hotel manager that specializes in
[5:34] Speaker 2: managing hotels, so you get a company that does that,
[5:38] Speaker 2: and then then after that the exercise is pretty much
[5:42] Speaker 2: the same as building a apartment building or an office building.
[5:46] Speaker 2: The only difference is is that you have to furnish
[5:49] Speaker 2: the hotel, so you add another level of complexity because
[5:53] Speaker 2: you're hiring an interior designer and you know a furniture
[5:58] Speaker 2: purchasing agent and the law and the assembling of.
[6:01] Speaker 3: The furniture and the delivery of the furniture
[6:04] Speaker 2: And all of that has to meet the brand standards
[6:06] Speaker 2: of your hotel, brand and operator

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