Forecasting for Success

Hi LinkedIn Friends,?

Forecasting is one of the most critical elements in ensuring success in the ever-evolving commercial real estate industry. In a market that can be as unpredictable as ours, having a clear, data-driven view of what lies ahead can mean the difference between thriving and just surviving.?

Effective forecasting allows us to anticipate challenges, capitalize on emerging opportunities, and make informed decisions that drive growth. Whether it’s predicting market trends, future cash flows, or asset performance, the ability to forecast accurately helps us to navigate uncertainty with confidence. It’s not just about making educated guesses—it’s about using the best tools and data available to create a clear vision of the future.?

To forecast effectively, there are several key components we need to consider:?

• Market Analysis: Understanding macroeconomic trends, regional market conditions, and industry-specific factors is crucial. By keeping a close eye on these elements, you can anticipate shifts that may impact your portfolio.?

• Historical Data: Analyzing past performance provides valuable insights into future outcomes. By identifying patterns and trends in historical data, you can better predict how similar conditions might affect your assets moving forward.?

• Scenario Planning: What if interest rates rise? What if market demand shifts? Scenario planning allows you to explore various "what ifs" and prepare for different potential outcomes. This proactive approach helps you stay ahead of the curve and respond quickly to changes.?

• Technology and Tools: Leveraging advanced forecasting tools and technologies, like AI and machine learning, can enhance accuracy and efficiency. These tools can process vast amounts of data and generate predictive models that offer deeper insights into future performance.?

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In practical terms, robust forecasting can guide you in several ways:?

• Capital Allocation: Forecasting helps you decide where to invest your resources for maximum return. By predicting which assets or markets will perform best, you can allocate capital more effectively.?

• Risk Management: By anticipating potential downturns or market shifts, you can take proactive measures to mitigate risks, whether that means diversifying your portfolio or adjusting your strategy.?

• Operational Efficiency: Forecasting not only informs big-picture decisions but also helps optimize day-to-day operations. Predicting future cash flows allows you to manage expenses more effectively and ensure you have the liquidity needed to sustain growth.?

Looking Ahead?

The CRE landscape is constantly changing, and the ability to forecast with precision is more valuable than ever. As we move forward, the firms that excel will be those that not only react to change but anticipate it. By integrating forecasting into your strategic planning, you can ensure your firm is well-positioned to succeed no matter what the future holds.?

What forecasting strategies have you found most effective in your CRE operations? How are you leveraging data and technology to improve your predictions? Share your thoughts and experiences in the comments.?

For more insights on strategic forecasting and data-driven decision-making, check out my WSJ Bestseller, Beyond the Building.?

Let’s also connect on other social platforms so we can continue the conversation: Instagram | Facebook.?

New Content?

Are you in CRE and like books? I invite you to join us for Real Reads. This book community was born from a cocktail conversation at a CRE conference. Instead of deals, markets, and rates, we talked about books. Books we've enjoyed. Books we recommend.?

Each month, we share a list of 3 books: one to help your business, one for personal or professional growth, and one just for fun. We’re not selling anything; we simply love books and want to share our favorites with you.?

I hope you will join us for our September issue and, hopefully, discover your next great read.? ? ?

Weekly Capital Market Update?

Last week, we saw some modest moves in the swaps market — 2-year swaps dipped just 1 basis point, while 10-year swaps fell 5 BPS to 3.34%. However, these small changes don’t reflect the volatility beneath the surface. The PPI came in slightly soft but as expected, and the CPI matched predictions at 3.2% YoY—still well above the Fed’s 2% target. Meanwhile, Retail Sales blew expectations out of the water, surging 1% MoM against a forecast of 0.4%, after a previous decline of -0.2%. Weekly jobless claims came in at 227,000, below the 4-week average, fueling hopes of a potential soft landing.?

This week, all eyes are on the Fed. The FOMC Meeting Minutes drop on Wednesday, setting the stage for Fed Chair Powell’s highly anticipated speech in Jackson Hole on Friday. Amid limited data releases, these events will dominate market attention.?

Looking ahead, there’s still a prime opportunity to execute forward starting hedges within the next 18 months. With around 95 BPS of rate cuts priced in this year and eight total cuts expected by the end of 2025, we recommend rolling trades forward now. We believe the market is too aggressive on the expected cuts, especially with CPI still well above target at 3.2%.?

For the latest information and tailored advisement, contact my team at Thirty Capital Financial.?

Finding value in my newsletter? Please comment and share with your followers.?

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All the best,?

Rob Finlay?