Any period of global conflict carries human consequences first, and that should never be minimized. What is unfolding in the Middle East is serious, and its impact extends well beyond financial markets.
We are not a geopolitical news outlet, and that is not the role we are trying to play. At the same time, based on the volume of conversations we have had with investors over the past several weeks, along with the readership of our prior piece, it is clear that many in our community are looking for a practical lens on how these events connect to markets and real assets.
On March 1, we published an article outlining how geopolitical shocks tend to move through markets, starting with a shift toward safety and liquidity, followed by reactions in energy, and then a repricing of inflation expectations, growth, and risk. That framework still holds, and for those who missed it, you can read it here: Global Conflict and Market Implications]
What has changed over the past two months is not the framework, but the duration.
In late February and early March, much of the market narrative assumed the conflict would be intense but relatively short-lived. In that scenario, energy moves could be sharp but temporary, and broader economic effects would likely fade as the situation stabilized.
We are now far enough into this that markets are no longer treating it as a short-term shock. The focus has shifted toward how long these conditions persist and where they begin to show up in the real economy.
The most direct channel continues to be energy, but the way it is being discussed has evolved. Earlier in the cycle, energy was viewed primarily as a market reaction. Today, it is increasingly being treated as an input cost problem that is working its way through transportation, logistics, and operating expenses across industries.
That distinction matters. A move in oil prices by itself is not the same as broad, persistent inflation. At least initially, it is a price shock in a key commodity. Where it becomes more consequential is when it lasts long enough to influence behavior, whether that is businesses adjusting pricing, consumers pulling back spending, or expectations shifting more broadly.
That is the tension the Federal Reserve is now dealing with. At yesterday’s FOMC meeting, which is widely expected to be Jerome Powell’s final meeting as Chair, the Fed held rates steady and pointed to elevated uncertainty tied in part to developments in the Middle East, while also acknowledging that recent increases in energy prices are contributing to ongoing inflation pressure. The challenge is not simply where energy is today, but whether it persists long enough to delay normalization in policy.
For real estate, this is where the conversation tends to become overly simplified. The impact is often reduced to a straight line between inflation and rates. In reality, the effects are more layered.
Higher or more volatile energy costs show up in operating expenses, they affect resident cost of living and, by extension, collections and renewal behavior, and they feed into construction costs and development feasibility. They also influence how lenders and investors think about risk and underwriting in an environment where inputs are less predictable.
At the same time, they begin to affect housing supply.
Development was already under pressure in many markets. Financing costs remain elevated, construction inputs have not fully normalized, and labor constraints persist. Energy feeds directly into that equation. If costs remain high or unpredictable, fewer projects will meet return thresholds, and more will be delayed or not move forward.
We are starting to see that play out. Pipelines are slowing, and while this is uneven across markets, the direction is consistent.
In the short term, this does not resolve existing imbalances. Housing supply is still needed in many areas, and a slowdown in construction can create its own set of challenges. But over time, a more constrained development environment changes the competitive landscape for existing assets.
When it becomes more difficult to build new housing, replacement costs rise and future supply becomes less certain. Existing assets do not need to solve today’s construction equation, and in many cases they were acquired at a lower basis. That dynamic tends to play out gradually, but it is one of the more important drivers in real estate cycles.
Within multifamily, workforce housing continues to sit in a relatively durable position. It serves a non-discretionary need, and demand is tied less to lifestyle decisions and more to practical constraints around affordability and location. That does not eliminate risk, particularly as cost-of-living pressures show up at the resident level, but it does provide a more stable demand base than many other property types.
The current environment highlights a tradeoff that is worth paying attention to. The same forces that can create near-term operating pressure, whether through higher expenses or resident affordability challenges, are also contributing to a more constrained supply outlook over time.
That is not a short-term call. It is a structural dynamic that tends to develop gradually as projects are delayed, canceled, or simply do not get started.
There are still open questions that will shape how this evolves, including whether energy prices stabilize, whether cost pressures begin to feed more broadly into expectations, and how quickly development pipelines continue to adjust.
What feels clearer today than it did in early March is that this is no longer just a market reaction to headlines. It is beginning to show up in the underlying cost structure of the economy, and that has implications that extend beyond rates alone.
From our perspective, that reinforces a familiar set of principles. Focus on basis, maintain conservative leverage, stay close to operations, and prioritize assets that serve a durable need.
That is also the lens we are applying as we evaluate current opportunities. In an environment where development is becoming more difficult and capital remains selective, existing workforce housing acquired at the right basis becomes increasingly important. For investors looking at opportunities today, that is where we believe the conversation should be focused.
The broader environment will continue to evolve, but those fundamentals tend to matter more, not less, when conditions become more uncertain.
Reed Goossens is an Australian-born real estate entrepreneur, investor, author, public speaker, and an all-around good bloke. Reed got his start in real estate investing back in 2012 when he moved to the US.
