It will be terrible: The company's CEO warned of a crisis in US real estate, but continues to choose one promising niche. How to invest money?

The commercial real estate market is heading towards a crash, which could be as devastating as the2008-2009 crisis, according to the CEO of a major real estate investment company. Patrick Carroll, founder and CEO of CARROLL, sounded the alarm about the state of the American commercial real estate market in an interview with CNBC in April2023. "Unfortunately, the party is over," he said. "The office market will be destroyed, hotels will be destroyed - it will be awful."

Carroll is not the first, and certainly not the last, to sound the alarm for the commercial real estate sector. Since the collapse of Silicon Valley Bank in March, experts have been expressing concerns about a massive wall of debt totaling1.5 trillion dollars looming over American commercial properties. This mortgage debt, primarily held by small and mid-sized banks, must be paid off by the end of2025. "No lender wants to give loans because they do not know how interest rates will change," Carroll said. Carroll added that offices are experiencing a "double whammy" and described the sector's fundamentals as "dreadful." "After COVID, people worked from home. The work week is now Tuesday through Thursday - so people are occupying less office space, no one wants to lend on that... it's a disaster," he said.

Real estate as a safe haven?

According to Carroll, there is one real estate segment that is successfully weathering this wave - multi-family real estate. Unlike commercial real estate, the multi-family housing market has "strong fundamental indicators," says Carroll, whose investment company manages more than33,000 multi-family units in nine states.

If you want to invest in multi-family real estate, here are two ways to do it.

Invest in residential investment funds

Investing in Real Estate Investment Trusts (REITs) is a way to profit from the real estate market without buying actual property or managing tenants. REITs are publicly traded companies that own income-generating real estate, such as apartments, shopping centers, and office buildings. They collect rent from tenants and distribute this rent to shareholders in the form of regular dividends. Here are two multifamily residential REITs worth considering.

• Camden Property Trust (NYSE: CPT) owns, manages, develops, and acquires multifamily residential complexes. As of June 30, it owned and managed 171 properties containing 58,564 apartments across the United States. With a market capitalization approaching $12 billion, Camden has a diverse asset portfolio focused on rapidly growing markets (in terms of employment, population, and migration).
• Another residential REIT worth considering is Mid-America Apartment Communities (NYSE: MAA), which has focused its portfolio on high-growth regions along the southern coast of the United States. As of December 31, MAA had interests in 101,986 apartments, including properties under development, across 16 states and the District of Columbia.

Use online investment platforms

Until recently, only the super-rich with millions of dollars could invest in prestigious commercial real estate. However, new online investment platforms have opened up opportunities for ordinary retail investors. Many platforms use a crowdfunding model, where you can join thousands of participants with similar interests—in this case, multifamily real estate—with the goal of increasing returns and generating passive income. With these user-friendly platforms, often supported by a team of experts helping you build your ideal portfolio, you can browse curated deals or join funds that invest in diversified real estate portfolios, maximizing your returns with low fees. If you want to invest in commercial real estate, you can find options that best suit your needs by answering a few quick questions using the Moneywise investment search tool.