Bloomberg Businessweek — Critical Section of Real Estate in Focus for Wealth Managers

Date: December 10, 2025
Hosts: Carol Massar & Tim Stenovec
Guest: Lauren Hochfelder, Co-CEO of Morgan Stanley Real Estate Investing

Episode Overview

This episode spotlights the evolving landscape of real estate investing, with a special focus on sectors presenting critical opportunities and challenges for wealth managers. Hosts Carol Massar and Tim Stenovec are joined by Lauren Hochfelder, Co-CEO of Morgan Stanley Real Estate Investing, to discuss market dynamics as 2026 approaches. The conversation zeroes in on the performance and future outlook of various real estate segments, with an in-depth look at the demographic forces reshaping residential and senior housing, and the implications for investors.

Key Discussion Points & Insights

1. The State of the Real Estate Market (03:04)

• Current Status: The market continues to experience the effects of a prolonged correction, with values having dropped about 25% from their peak over nearly four years.
• Market Sentiment: “We’ve been bouncing around this bottom for quite some time, but it feels like the conditions are on the ground... This could be the transition into a recovery period.” (Lauren Hochfelder, 03:04–03:40)
• Buyers & Sellers: Sellers are growing more motivated, buyers are increasingly interested, and debt markets are wide open—signs of a possible inflection point.

2. Investor Caution & "Liberation Day" (04:08)

• Lack of Investor Activity: Despite declining prices and favorable financing conditions, investor participation remains muted.
• Key Event: “...we were hit with Liberation Day... that created a lot of dislocation in the capital and occupier markets... decision makers pause[d], which hurt industrial real estate in particular. You saw rents trend down for the first time in a very long time.” (Lauren Hochfelder, 04:08–04:53)

3. Diversity Within Real Estate Sectors (05:16)

• Not Monolithic: Real estate is segmented, with Class A offices and data centers showing strength in certain regions, while others lag.
• Undersupplied Sectors: “Residential, broadly speaking, is necessity-based and it is under supplied. As a broad matter, it is a sector we like.” (Lauren Hochfelder, 05:16–05:44)

4. Demographic Shifts Driving Senior Housing (05:44)

• Aging Population: The U.S. population aged 80+ is set to grow by 50% over the next five years.
• Supply-Demand Gap: "We are building about half of what we need," pointing to an acute undersupply in senior housing. (Lauren Hochfelder, 06:03–07:01)
• Wealth Concentration: “Over half of this country’s wealth is concentrated in this age cohort... It tracks as among the most affordable, because this is a cohort that... can afford to pay for this.” (Lauren Hochfelder, 06:03–07:01)

5. Affordability & Social Considerations (07:14)

• Who Can Afford Senior Housing?
  • Private-pay, assisted living generally remains affordable for those who sell homes or draw down savings.
  • “Senior housing tends to be more paid for by savings, whether that’s dividends off your savings or actual drawdown of assets. So I sell my house and that gives me a number of years to afford senior housing.” (Lauren Hochfelder, 07:49–08:19)
• Potential Overbuild?
  • Not everyone in the aging demographic will be able to afford or access higher-end facilities.
  • “There are different segments of senior housing, different price points. The margins are a bit different. So there’s a provision of services. But what I would say is in a way you have a natural hedge because there are health care provisions needed for this population.” (Lauren Hochfelder, 08:42–08:58)

6. Technological Innovation & Efficiency (09:11)

• Bringing Down Costs: Innovations in technology are helping to reduce the cost of providing health care and services, making senior housing more viable—even for those living with family.
  • “We’re seeing the adoption of technological innovation, among other things, to bring down the cost of this provision of services...” (Lauren Hochfelder, 09:11–09:24)

7. Societal Impact & Opportunity Cost (09:24)

• Workforce Participation: “We’re seeing it anecdotally, colleagues who are leaving to actually spend time with their aging parents and take care of aging parents... this is going to hit, and it comes with a financial opportunity cost.” (Carol Massar & Lauren Hochfelder, 09:24–09:41)

Notable Quotes and Memorable Moments

• On Market Recovery:
  • “Here we sit, real estate values down 25%. This could be the transition into a recovery period.”
    (Lauren Hochfelder, 03:32)
• On Investor Uncertainty:
  • “What do big decision makers do when hit with a lot of uncertainty? They pause.”
    (Lauren Hochfelder, 04:17)
• On Senior Housing as an Investment:
  • “Senior housing is a really high conviction strategy for U.S. 2026.”
    (Lauren Hochfelder, 05:45)
  • “The 80-plus population is expected to grow by 50% over the next five years.”
    (Lauren Hochfelder, 06:05)
• Affordability Discussion:
  • “It tracks as among the most affordable, because this is a cohort that... can afford to pay for this.”
    (Lauren Hochfelder, 07:01)
  • “There are different segments of senior housing, different price points... you have a natural hedge.”
    (Lauren Hochfelder, 08:42–08:58)
• Societal Challenges:
  • “We’re seeing it anecdotally, colleagues who are leaving to actually spend time with their aging parents... this is going to hit, and it comes with a financial opportunity cost.”
    (Carol Massar & Lauren Hochfelder, 09:24–09:41)

Key Timestamps

• 01:58 — Episode begins with real estate trends: NYC casinos, U.S. energy policy, Hong Kong luxury property.
• 02:29 — Weekly "Women, Money and Power" segment introduction.
• 03:04 — Lauren Hochfelder discusses the market's current state.
• 04:08 — Deep dive into why investors remain on the sidelines.
• 05:16 — Differentiation within real estate; focus on strong and weak subsectors.
• 05:45 — Senior housing called out as a top conviction area.
• 06:03–07:01 — Supply and demographic trends in senior housing.
• 07:14–08:42 — Affordability and segmentation of senior housing.
• 09:11–09:24 — The role of technology in senior care costs.
• 09:24–09:41 — Socioeconomic impacts for families and the workforce.
• 09:49 — Episode closes with a look toward 2026.

Tone & Takeaways

• Pragmatic: The discussion is analytical yet pragmatic, integrating data, market trends, and firsthand insights.
• Forward-Looking: Hochfelder and the hosts emphasize not just where the market has been, but where it might be heading—especially into 2026.
• Socio-economic Awareness: The episode acknowledges the intersecting financial and social challenges related to senior housing and caregiving.

This episode provides essential context and expert perspective on the shifting real estate market, with critical insights for wealth managers, investors, and anyone monitoring demographic-driven investment opportunities.