Commercial real estate has always been subject to cycles of booms and busts. However, according to Dave Liu, Managing Director at investment management firm Harrison Street, focusing on real estate assets that cater to essential life needs offers greater resilience during economic downturns.
Harrison Street’s Demographic-Centric Strategy
Liu explains that Harrison Street sets itself apart by targeting specific sectors that cater to inelastic demand tied to demographic life stages. Instead of investing in traditional sectors like office buildings or retail, the firm focuses on markets such as student housing, self-storage, medical offices, and biotech facilities. This approach provides a safeguard against economic turbulence, as these types of real estate are always in demand.
“We look for areas where there will always be demand, even during downturns,” Liu says. “College students will always need housing, everyone needs healthcare, and seniors require specialized housing at different stages of their lives.”
A Changing Demographic Landscape
The aging of the baby boomer generation plays a crucial role in this strategy. Liu points out that as these individuals enter their retirement years, there is a growing need for senior living spaces and healthcare services. Harrison Street is one of the largest private investors in senior living in the country, and they are poised to capitalize on the demand from the so-called “silver tsunami.”
“The baby boomer demographic continues to drive demand for senior living, healthcare services, and life sciences innovations,” he adds.
The Demographic Advantage
Liu argues that focusing on these niche markets has given Harrison Street an edge, especially during times of market volatility. Since its inception in 2005, the firm has weathered significant market shifts—from the global financial crisis to the effects of COVID-19 and inflationary pressures—without experiencing the extreme volatility that traditional real estate sectors often face.
“Where most sectors suffered, our investments showed resilience,” Liu says. “This demonstrated the robustness of our business model, and in the past decade, we’ve seen more institutional capital flowing into these alternative sectors.”
The Firm’s Investment Approach
Liu is responsible for overseeing the healthcare and life sciences sectors at Harrison Street. His team manages a portfolio that includes over 220 medical outpatient buildings and 41 life sciences properties, with a combined gross asset value of approximately $11 to $13 billion.
“Our strategy is multifaceted,” he explains. “We develop new properties, acquire existing ones and reposition them, and aggregate portfolios. These niche sectors are typically not large, but with careful management, we build substantial portfolios.”
For example, one of their recent acquisitions was a building in Houston leased to the renowned MD Anderson Cancer Center as a treatment facility. This type of investment, Liu says, aligns with their core strategy of generating stable income and asset appreciation.
Another notable project is the 101 College Street development in New Haven, a joint venture with Winstanley Enterprises. The project, which includes office and laboratory spaces, is home to major tenants such as Yale University and Alexion Pharmaceuticals. This development reflects Harrison Street’s strategy of investing in locations near prestigious universities and large health systems.
Real Estate’s Tangible Impact
Liu shares a personal connection to the industry’s tangible nature. He takes pride in the fact that their properties have a meaningful impact on the communities they serve.
“When we provide spaces for healthcare practices and biotech startups to flourish, it benefits everyone—patients, tenants, and investors,” Liu says. “You can see these properties having a direct, positive effect on the neighborhood, and sometimes even beyond.”
A Personal Journey in Real Estate
Liu’s path to real estate was shaped by his interest in urban development. His experience at Yale School of Management (SOM) provided him with the necessary skills to excel in commercial real estate while also offering a broader societal perspective.
“The business and society focus at Yale SOM gave me both the technical skills and the context I needed for my career,” he notes. “Real estate requires you to juggle many roles—finance, marketing, and stakeholder management—and that’s something I draw on every day.”
The Appeal of Healthcare and Life Sciences
Liu’s specialization in healthcare and life sciences was not planned, but it arose naturally from his time working at Ventas, a healthcare REIT. He found that these sectors, which offer a higher societal impact, resonated with him, and that sense of purpose has carried through to his work at Harrison Street.
“I didn’t seek out this specialty, but I’ve found it incredibly rewarding,” Liu says. “I get to see the direct impact of our properties, whether it’s providing healthcare services in Chicago or supporting biotech innovation that could change the world.”
The Rewards of Leadership
While Liu is deeply committed to the tangible impact of his work, he also values the leadership aspect of his role. Managing a team of talented professionals has become one of the most fulfilling aspects of his job.
“Real estate is a numbers game, but managing people is where the real value lies,” he says. “Developing and retaining high-performing teams makes us better at identifying opportunities, managing risks, and executing transactions. Working with such a smart, hardworking group is incredibly rewarding, and it makes every day exciting.”
Conclusion
Harrison Street’s approach to commercial real estate is a reflection of the firm’s commitment to both financial success and societal impact. By focusing on healthcare, life sciences, and other sectors driven by demographic trends, the firm is well-positioned to navigate economic cycles and continue creating value for its investors and the communities it serves.
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