Viewpoint

We asked two of our Research Foundation Governors: “What is your organization doing to weather the current inflationary environment and/or prepare for a potential recession?"

“Tenant financial stability and inflation risks have become more prominent risk factors recently as lease terms are being negotiated. A trend we have seen with our clients is tying rents to CPI or other variables tied to inflation instead of flat rates or predetermined amounts that could create significant inflation risk depending on the lease. Further we have seen a significant uptick and consideration for short-term leases that provide options to hedge against these risk factors and provide opportunity to adjust the tenant mix or provide alignment to current market conditions for lease terms. We are advising our clients to assess their risk on existing leases and to be more strategic on tenant selection and lease terms established with new tenants.”

Cory Bultinck

 

Cory Bultinck, CPA, MBT
Partner, Wipfli LLP

 

 

“We continue to exercise great discipline in underwriting and investing, and as a developer that starts with land basis. On top of that, we continue to be laser focused on fundamentals, such as markets denoted as high barrier to entry, with inherent proximity to transportation infrastructure and population density. We believe that rent growth and asset appreciation will continue in hyper infill markets which are anchored by these locational attributes.”

Mark Levy

 

Mark G. Levy
President and CEO, BBX Logistics Properties