Jamestown CEO: Sun Belt Is Safest Global CRE Bet Amid Declining Birth Rates, Rising Instability
Those who have invested in commercial real estate in the Sun Belt may be feeling the pinch of oversupply amid falling rents.
But Atlanta-based Jamestown, which is backed primarily by German investors, says long term, there might not be a better bet on the planet for future value than the region that stretches from the Carolinas to Texas.
Jamestown CEO Matt Bronfman said the developer of iconic adaptive reuse projects like Chelsea Market in New York, Ponce City Market in Atlanta and Ghirardelli Square in San Francisco focuses on population growth outlook before making real estate investments.
“The whole Western World has demographic challenges,” Bronfman told Bisnow in an interview last week. “If you’re a professional real estate investor, you should be a part-time demographer as well, because demographics are destiny in real estate.”
Global fertility rates are dropping, with some developed countries starting to see population declines. The U.S. fertility rate hit a "historic low" in 2023, according to the most recent data available from the Centers for Disease Control and Prevention.
But that trend doesn't hold quite as true in the Sun Belt, where cities and towns are growing faster than their peers in the Northeast and West Coast.
“And anytime we look at a new market, one of the first things I asked to see are, 'What are the demographics like over the last 10, 20 years? What are they forecasted to be over the next five, 10 years?” Bronfman said. “America has a better story than other places, and the Sun Belt has a better story than most of the rest of America.”
The birth rate decline is an issue economists point to as a major warning sign for future economic prosperity. The European Union is facing that prospect already, with Eurostat projecting there will be some 27 million fewer people in those countries by 2100.
While the U.S. population is growing at a faster rate, it could see its population growth trend reverse after reaching a peak of 370 million residents by 2080, according to the Census Bureau.
“You have to be really cognizant of immigration patterns and work hard to pick the winning markets. For example, there are parts of the Upper Midwest in the U.S. which make me nervous from a demographics [and] jobs perspective,” Bronfman said in a follow-up email. “Same is true, and arguably more so, for Europe.”
And even though President-elect Donald Trump has been a divisive figure who campaigned on a deep overhaul of the U.S. government, Bronfman pointed out that almost every developed nation is experiencing political upheaval.
“Does the U.S. have challenges? Absolutely. But my God, look at Europe. Look at the Ukraine situation,” Bronfman said. “Trudeau stepping down in Canada, Macron in trouble in France, the chancellor of Germany being forced to an early recall here in a few months. In South Korea, they had this martial law situation, and now they're trying to arrest the past president, but they can't because of his security forces.”
Bronfman said by comparison, the job growth, innovation and surging immigration in the U.S. make it the safest bet for long-term real estate investments.
“I know immigration is a controversial phrase, but we’re still a place hardworking people want to come to live and experience the American Dream,” he said. “That’s cliché, too, but I think it’s true. Whether they're high-tech workers or manual laborers, this is still a place where people want to be.”
As a real estate investor, he still believes in Europe, especially cities like London, Amsterdam and Rotterdam. But Jamestown, which manages $13B in real estate assets and added more than $2B to its property holdings last year, still hyperfocuses on demographics before buying.
Jamestown's most recent investments include the April purchase of a 160K SF Kroger-anchored shopping center in Sandy Springs, a suburb of Atlanta, where the metropolitan area population is expected to grow from 6.5 million people today to nearly 8 million by 2050.
Jamestown in August acquired the Atlanta office of development firm North American Properties, expanding its portfolio of Sun Belt real estate and development projects.
While the developer is most known for its major repositioning projects, Bronfman said lenders are not eager to fund complex redevelopments in the current debt environment. Instability has made it difficult to forecast the future of interest rates, he said.
“You couple geopolitics to the Trump administration talking about tariffs, you can find economists who will say interest rates are coming down 100 [basis points] and economists who say they're going up 100,” he said.
But the wave of loan maturities hitting and rising distress is providing investment opportunities. Bronfman said Jamestown is looking at both acquiring distressed assets or lending mezzanine debt to help troubled owners refinance their mortgages.
“A lot of people intentionally kicked the can down the road — and I don't mean that negatively — hoping that interest rates and cap rates would come down 100, 150 basis points. It wasn't long ago that's what people thought was going to happen. That hasn't happened,” he said. “At some point, you've got to quit kicking the can down the road and put those assets on the market and get them recapitalized.”