Data Centers, Logistics, and Why Office Isn't Dead
March 17, 2026
Commercial real estate is evolving rapidly, and Richard Hill is back on REdirect to continue his discussion on cycles, capital allocation, and opportunity in the market. In this episode, Jonathan Spitz and Storm Murphy sit down with Richard to unpack why public markets move first, private valuations follow, and debt distress lags. Richard shares insights on tiering across property types, identifying resilient assets, and why today’s cycle rewards operators who can execute, not just speculate.
What if today’s turbulence in commercial real estate isn’t disorder but the cycle unfolding as it should? Returning to REdirect, Richard Hill brings further perspective on how to navigate this moment. Jonathan and Storm explore his framework for reading cycles: listed REITs lead, private market valuations adjust later, and distress in debt comes last.
The conversation moves into practical, actionable insights. Richard explains why tiering across property type and quality now dominates performance, why modern logistics and Class B housing offer selective opportunity, and why data centers should be viewed as infrastructure plays rather than speculative tech bets. He highlights secondary and overlooked markets poised for growth, from Knoxville to Columbus to Greenville, driven by industrial reshoring, AI demand, and long-term demographic shifts.
Listeners will also learn how to think about CRE like equity sector rotation, why patience and operational skill outweigh financial engineering, and the importance of focusing on net operating income and unlevered IRRs over headline cap rates.
For anyone deploying capital, evaluating risk, or trying to separate signal from noise, Richard provides a clear, disciplined roadmap for the next phase of CRE - emphasizing humility, long-term thinking, and simplicity.
What You'll Learn:
Build vs. Buy - when it actually makes sense
Why high construction costs + below-replacement pricing can still create rare development windows, especially in logistics.
Why unlevered IRR beats cap rates
How focusing on true project returns (not headline yields) can justify selective development, including data centers.
How focusing on true project returns (not headline yields) can justify selective development, including data centers.
How “tiering” reveals where growth really is
Top-tier assets are winning while older stock struggles and why Class B housing and modern logistics stand out.
Top-tier assets are winning while older stock struggles and why Class B housing and modern logistics stand out.
Why CRE behaves more like sector rotation than one asset class
Different property types move on different timelines and the averages hide opportunity.
Different property types move on different timelines and the averages hide opportunity.
The lower-risk path to data centers
Why “powered shell” development lets investors earn strong returns without becoming a tech company.
Why “powered shell” development lets investors earn strong returns without becoming a tech company.
Office isn’t dead - it’s divided
Most vacancy sits in weaker buildings, while high-quality assets may quietly present long-term value.
Most vacancy sits in weaker buildings, while high-quality assets may quietly present long-term value.
AI + reshoring as long-term tailwinds
From data centers to the new “battery belt,” industrial demand is being reshaped for the next decade.
From data centers to the new “battery belt,” industrial demand is being reshaped for the next decade.
Simple rules that outlast every cycle
Stay humble, think long-term, and keep the math straightforward - quality + valuation still drive outcomes.
Stay humble, think long-term, and keep the math straightforward - quality + valuation still drive outcomes.
About the Guest:
Richard Hill is Senior Managing Director and Global Head of Real Estate Research & Strategy at Principal Asset Management, where he leads global research, shapes capital allocation strategy, and delivers the firm’s real estate outlook to clients. With more than two decades of experience across derivatives, capital markets, and research, Richard previously led real estate strategy and research at Cohen & Steers and headed Commercial Real Estate Research at Morgan Stanley.
Episode Chapters:
[00:00:00] Intro
[00:01:34] – 2026 Market Outlook
[00:02:52] – Build Versus Buy: Why Modern Logistics Development Still Makes Sense
[00:05:26] – Class B Opportunities, NOI Growth, And The Cap Rate Debate
[00:16:39] – Employment Trends, AI Spending, And Consumer Strength
[00:17:41] – Investing in Data Centers
[00:28:40] – The Rebirth Of Secondary Markets And Transformational Economic Booms
[00:33:18] – Three Nuggets of Wisdom on Investing in Real Estate
Quotes:
- "Commercial real estate is not just about interest rates. Net operating income growth matters, and financing conditions matter as well."
- "You need to focus on net operating income growth. If you can find the right property types, the right markets that are achieving that NOI growth, you're gonna do really well this cycle."
- "We're just real estate investors. We're focused on acquiring land in markets where there is always going to be a need for data centers, and we have a very clear path to getting power."
- "Markets that are perceived to be small might not be small ten years from now. Richmond, Virginia, Nashville, Tennessee, Jacksonville, Florida - these are now huge markets that were overlooked before."
- "Be humble because you're going to get it wrong. Think long term because this is a longer-term asset class. And don't complicate it, this is not rocket science."
Episode Resources:
- Richard Hill on LinkedIn
- Company Website:
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