CRE42 Commercial Real Estate Investment Strategy
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MIT Center for Real Estate

MIT CRE — 11.S969 Commercial Real Estate Investment Strategy

Group Presentation #1

Assignment

Your team is launching an investment vehicle to acquire and manage open-air retail (neighborhood centers and strip centers) in a single U.S. metropolitan statistical area (MSA). The fund has an indefinite hold period similar to a public Real Estate Investment Trust (REIT).

Your assignment is to choose a specific market and submarket based on the criteria outlined below and make the case for why your chosen MSA & submarket will outperform on a risk-adjusted basis over a 10-to-20-year investment horizon.

Open-Air Retail

Your fund targets neighborhood centers (typically grocery-anchored or drugstore-anchored multi-tenant centers) and strip centers (smaller open-air centers, anchored or unanchored). These two formats represent the largest retail subtypes by square footage nationally and have demonstrated consistent vacancy compression over the past decade.

Excluded: Enclosed malls, lifestyle centers, power centers, and single-tenant/NNN. Suggested format overview & recent history:

Deliverables

Each team delivers an in-class presentation (PowerPoint style) with a 3-page (max) bullet point memo outlining key points. Each team member is expected to prepare and present at least one slide.

MSA Selection & Thesis

Present the demographic, economic, and supply-side case for your chosen MSA over a 10–20 year investment horizon. Your thesis should address:

  • Population growth and migration trends. Is the MSA gaining or losing people? From where? Is growth driven by domestic migration, international immigration, or natural increase? How sustainable are those drivers?
  • Employment and income dynamics. What industries drive the local economy? Is household income growing? Are there concentrations of employment that create risk?
  • Retail supply context. What is the existing retail inventory per capita? How does recent construction activity compare to absorption? Is the market building new competitive supply or is it constrained?
  • Growth vs. mature market positioning. Where does your MSA fall on the growth-to-mature spectrum, and what does that mean for your strategy?

Suggested Materials

Submarket Targeting

Identify a target submarket and explain why it is positioned for above-market rent growth. Consider:

  • Household income and density. What are the demographics of the trade areas you’re targeting? Higher income supports higher rents and more resilient tenancy.
  • Supply constraints. Are there barriers to new construction (zoning, land cost, entitlement timelines) that protect your assets from competitive supply?
  • Anchor tenant quality. What types of tenants dominate the submarket? Grocery, medical, restaurant, and service tenants are more e-commerce-resistant than discretionary goods retailers.
  • Infill vs. suburban growth corridors. Are you targeting established infill locations with replacement-cost barriers, or newer suburban corridors following rooftop growth?

Suggested Sources

Rent Growth Thesis

Why will rents grow faster than inflation? This is the core of your investment case. Identify the structural factors that support above-inflation rent growth in your target submarkets over a long hold period:

  • Supply constraints. Rising construction costs, limited available land, and the post-2017 retail construction collapse mean very little new competitive supply is being delivered nationally. Is this true in your market specifically?
  • Population growth driving demand. Net in-migration and household formation create incremental demand for retail-serving goods and services. Quantify the population growth trajectory for your MSA.
  • Tenant category resilience. Grocery, restaurant, medical, and personal services tenants are resistant to e-commerce displacement. Is your target submarket anchored by these categories?
  • Below-replacement-cost rents. In many markets, existing retail rents are well below the cost of building new competitive product. This gives landlords pricing power as leases roll.

Suggested Materials

General Economic and Other Conditions

Scope & Constraints

Parameter Constraint
Target format Neighborhood centers and strip centers only
Geography Single MSA & CoStar submarket (your choice)
Hold period Indefinite (perpetual-life REIT structure)
Capital structure Assume 100% equity (no leverage)
Excluded No individual deal proformas; no tenant-level underwriting

Suggested Data Sources

  • CoStar — MSA and submarket-level vacancy, absorption, deliveries, rent, and inventory data by retail subtype (available through MIT CRE)
  • U.S. Census Bureau — Population estimates, American Community Survey (household income, age distribution, migration)
  • Brokerage research (Q4 2025) — CBRE, JLL, Cushman & Wakefield, Colliers national and MSA-level retail market reports
  • FRED / BLS — Employment data, CPI components, wage growth by MSA
  • ICSC / NAREIT — Retail REIT performance data; shopping center metrics

Evaluation Criteria

Presentations will be evaluated on:

  • Clarity of thesis
  • Data discipline
  • Supply-demand reasoning
  • Counterpoint analysis
  • Presentation quality and group participation

Scope: This is a first-class exercise. The goal is not a comprehensive fund pitch—it’s to practice thinking about market selection through the lens of long-term supply-demand dynamics. Keep the analysis focused.

Related Analysis

← Retail Landing Page

Retail Format Divergence

Growth vs. Mature Markets

E-Commerce & The Oversold Retail Apocalypse