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Texas

Billionaire John Goff predicts CRE discounts

Thinks high interest rates will force many investors to sell

Billionaire John Goff Predicts Wave of Real Estate Discounts
Photo illustration of Texas real estate investor John Goff (Texas Business)

Billionaire real estate investor John Goff anticipates a wave of attractive properties will soon be up for grabs at discounts due to high interest rates forcing some investors to sell.

Goff, founder of Fort Worth-based Crescent Real Estate, believes these properties will be offered at  “compelling” prices, but the discounts won’t be nearly as steep as what he saw in the 1990s, Bloomberg reported. 

“When I started Crescent, we were buying assets by the pound,” he said. “We were able to buy extraordinary properties that were newly built at fractions of what they were built for. Today, there’s definitely discounts available, but it’s not to the extreme that it was in the ’90s.”

Goff’s outlook is in line with other prominent real estate investors, such as Barry Sternlicht of Starwood Capital Group and Armen Panossian of Oaktree Capital Management, who are poised to seize opportunities arising from potential distress in the commercial real estate sector. The industry faces numerous challenges, including sky-high office vacancies and hiked interest rates, particularly affecting firms that need to refinance.

A  whopping $1.4 trillion worth of U.S. commercial property loans are set to mature this year and next, adding pressure on landlords with assets that are struggling to stay afloat. The value of U.S. office properties declined by 21 percent year-over-year in October, the outlet reported, citing data from real estate analytics firm Green Street. 

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Among Goff’s many real estate endeavors, one notable project that just opened is Crescent Fort Worth, a $275 million mixed-use development with 168,000 square feet of office space, 175 upscale rental units and a 200-room luxury hotel. 

Goff’s firm is also partnering with New York-based VICI Properties to build a luxury resort near Austin, called Canyon Ranch. The $200 million resort is slated for completion in 2025. Crescent is leaning on equity partners to get projects funded, Goff said.

“Fortunately we have all of our projects funded,” he said. “But to get funding for a new incremental project today would be very difficult.”

—Quinn Donoghue 

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