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n the third quarter, commercial real estate saw significant growth, outperforming other sectors in the stock market. Matt Argersinger, an advisor at The Motley Fool, attributes this to the Fed's pivot on interest rates, which has improved liquidity and reduced capital costs for investors.

    Argersinger highlights Simon Property Group as a standout performer in retail, with occupancy rates reaching 95.9% despite a 3% increase in base rent. He credits the company's high-end locations and tenant mix, including Apple Stores and Neiman Marcus, for its success.

    In contrast to office space, which has struggled due to secular challenges, other categories of commercial real estate are thriving. Industrial real estate, data centers, cell towers, and retail have all seen growth, with some REITs reporting record results.

    The housing supply shortage in the US is a significant challenge, with an estimated 2-3 million homes needed to meet demand. Argersinger believes that government intervention and zoning changes are necessary to address this issue, as private capital alone cannot solve it.

    Homebuilders have been hesitant to increase construction due to concerns about interest rates and the risk of overbuilding. While mortgage rates have decreased from their peak, they remain high enough to deter some homeowners from selling and buying new homes.

    Argersinger also notes that the growth in artificial intelligence and data centers will require significant amounts of power, leading to a potential shortage of electricity and a need for new power plants. This will be an important story to watch over the next several years.