In the latest episode of the Inside CRE podcast, NAIOP President and CEO Marc Selvitelli sat down with Carleton Riser, president of Transwestern, for a wide-ranging conversation on development strategy, market timing and how smart capital is positioning for the next upcycle. With more than 30 years in the business, Riser has seen multiple downturns, and the lessons he’s carried forward are shaping how he approaches today’s unique environment.
Another Cycle, Another Lesson
The dot-com bust underscored the fact that “credit actually matters,” Riser said, after markets cratered on the back of “phantom absorption” (where commercial real estate space appears occupied on paper but goes unused). The Global Financial Crisis taught him that “having flexibility in your capitalization matters because when the tide goes out and there’s no liquidity in the market, you need to make sure you’ve got some sort of staying power.”
More recently, the COVID-19 pandemic fueled a surge in multifamily and industrial development, where “the markets got out over their skis, inflation came in, and then an interest rate spike [occurred]. From a development standpoint, we’ve been in a three-year downturn because of that,” he said.
Thankfully, “we have a very diversified business, both geographically and by product type, which I think has served us well through these different fluctuations in the market,” Riser said.
Making Smarter Bets in Today’s Market
With capital markets disruptive and liquidity still constrained, Riser says Transwestern evaluates new projects in two different ways: the cost of upfront pursuit capital and the potential capital markets environment 9-18 months down the road when institutional partners would likely join the deal.
That means only the strongest opportunities make the cut. “The better deals are the first deals to get done as we emerge from this trough,” Riser said. Transwestern is prioritizing projects in submarkets with strong fundamentals, backed by smart underwriting and realistic assumptions around occupancy and rents.
Mixed-use Success Means Flexibility
Mixed-use development is complex but rewarding, Riser said, and requires discipline from day one. Don’t assume a mixed-use project can fix a weaker location: every individual use must stand on its own. Flexibility is key; plans must be able to adapt as market conditions evolve without requiring a complete redesign. Capital stacks should allow each component of the project to attract the right investors.
Avoid what Riser’s team has described as “broken teeth” – a missing piece of the “mix” in a mixed-use project – “which can send your plan sideways… and can be fatal to the first phase.” The complementary nature of the different product types working together is absolutely critical.
Capital is Scarce and Selective
Capital scarcity, particularly for multifamily development, is shaping strategy, Riser said. Investors with dozens of opportunities may pursue only a handful, so differentiation is essential.
On the other hand, mixed-use has become appealing to many partners as both a defensive and offensive play. “We know that if executed properly, a mixed-use project, especially in a Sunbelt market, will drive superior occupancy levels and superior rental rates if that retail offering and that placemaking aspect of the environment is compelling for those ventures as a differentiator versus their alternatives,” Riser said.
Transwestern is staying away from preferred equity and mezzanine debt structures, preferring a more conservative capital stack. “The more leverage, the more pressure you’ve got on your capital stack, the less staying power you have in the event of a market sea change,” he explained.
Fortunately, construction lending has improved, and Riser sees solid absorption trends across the Sunbelt. “In some of these markets, we think there’s a rationale to build today. In some of them, it’s more towards the end of 2026. In some of those, it’s more towards 2027. But we’ve seen a lot of robust absorption in those markets.”
Positioning for the Next Upcycle
Asked what developers should be doing now, Riser didn’t hesitate: control land. But do so carefully. Buying too early or without a clear picture of where capital markets are headed can be risky.
“None of us has a perfect crystal ball, but we are spending considerably more time these days trying to forecast out to early 2027, early 2028, and trying to get comfortable with that when we are putting capital at risk today,” he said.
Success in development is less about predicting the future and more about preparing for a wide range of possibilities.
Listen to the full episode of the Inside CRE podcast.
