- Hines Global CIO David Steinbach says investors should weigh property fundamentals over going-in rates, and that rising financing costs are cutting off new supply.
- Higher mortgage rates are pushing more households to rent, while too little housing is under construction, so Hines expects more rental growth ahead without the oversupply of past cycles.
- Hines views rates as near equilibrium, so its investors are favoring acquisitions of existing assets with a strong emphasis on income rather than development.
Hines Global CIO David Steinbach says tight construction is creating a buying opportunity for investors, according to GlobeSt. His playbook is to acquire existing properties, prioritize income and target markets where scarce new building could lift rents.
Steinbach laid out the view in an interview with Bloomberg.
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Fundamentals Before Rates
Steinbach said the market’s obsession with interest rates can distract from what drives individual assets. He wants deals underwritten on supply and demand, not just the going-in rate.
Hines is seeing stronger real estate fundamentals around the globe, he added.
Renters Benefit From the Squeeze
Bloomberg’s Avril Hong asked whether climbing Treasury yields and mortgage rates are deepening the housing problem. Steinbach answered that the same pressure nudges households toward renting, which helps landlords.
With too few homes being built, he said, there is none of the oversupply that hurt earlier cycles. The shortfall today should translate into stronger rent growth in the years ahead.
Rates Near Equilibrium
The 10-year Treasury yield still sets the tone for long-term borrowing costs, but Hines sees it as roughly in balance and likely to hover near current levels for a while. A further rise is possible soon, though Steinbach expects the market to absorb it.
What matters more, in his view, is the effect on development. He argued that the Fed is effectively shutting off new supply, so Hines’ investors lean toward buying completed properties and put heavy weight on income.
Why It Matters
The argument separates the rate debate from the supply debate. Rates may stay put, but the building slowdown they cause is what shapes future rent growth.
Hines has been putting capital to work on the buy side, as its Bishop Arts portfolio purchase in Dallas shows.
What’s Next
Watch whether other institutions adopt the same income-first, buy-existing approach. Another jump in yields would test Steinbach’s belief that the market has already priced in the risk.
