Where Capital’s Actually Moving in Q3 (Hint: It’s Not the S&P)

GANNON’S MARKET BRIEF

There’s a growing consensus among major institutions: the next decade might look very different from the last.
🔹 Goldman Sachs forecasts just 3% annualized returns for the S&P 500 over the next 10 years (NY Post).
🔹 Vanguard expects 3.3%–5.3%, and now suggests a 70/30 bond-to-equity portfolio to hedge against weak performance (Business Insider).
🔹 Morningstar’s latest capital markets forecast: 2.8%–4.8% annual equity returns (Morningstar).

Why is Goldman Predicting 3% Returns?

Goldman cites four structural headwinds:

1️⃣ High Valuations

• The S&P 500’s CAPE ratio is ~38placing it in the 97th percentilehistorically. The last time valuations were this high? Right before the Dot-Com crash.

2️⃣ Market Concentration

• A disproportionate share of recent gains has come from just seven mega-cap stocks. If (when) those stall, the entire market could lose steam.

3️⃣ Sticky Inflation

• Government spending, labor costs, and supply chain reconfigurations are fueling sticky inflation, squeezing profit margins and muting corporate growth.

4️⃣ Low Dividend Yields

• Base yields below 1.5% = heavy reliance on price appreciation 

When valuations stretch and yields dry up, disciplined investors move toward real cash flow.

What I’m Watching

Valuation & Concentration Risks
The S&P 500’s price-to-earnings ratio sits well above historical norms, with the top 10 stocks contributing over 80% of 2024’s gains. That kind of narrow leadership creates fragility in the system. (Goldman Sachs Outlook)

Slowing Growth + Sticky Inflation
Onshoring, wage pressure, and systemic cost increases in healthcare and energy may keep inflation above the Fed’s target and growth below trend.

Dividend Yields at Historic Lows
Today’s base dividend yields hover around 1.5%, meaning stockholders are relying almost entirely on price appreciation, an increasingly risky bet. (YCharts – S&P 500 Dividend Yield)

How I’m Allocating (And How You Might Too)

Where Streamline Fits In

Our strategy is simple: Real assets. Reliable income. Smart upside.

With Streamline Investment Group Fund III, we’re acquiring stabilized or value-add medical and Class B office assets across Phoenix.

📌 8% Preferred Return
📌 1.9x Target Equity Multiple (MOIC)
📌 80/20 Profit Split
📌 15%+ Net Targeted IRR over 5-Year Hold
📌 Vertically integrated execution from acquisition to asset management

Why Medical Office?

Our tenants, from primary care to diagnostics, deliver in-person, essential care that keeps leases durable and demand consistent.

The Takeaway

If the public markets are poised for 3–6% annual returns over the next decade, that’s not a crisis. It’s a cue.

A cue to shift toward income-producing, underwritten, tax-efficient assets you can actually control.

That’s where durable cash flow and true compounding come alive.

Let’s build something real. Book a Call

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NATIONAL MOMENTUM

CRE Lending Surges for Healthcare and Office Projects

The latest data shows a surprising shift: CRE lending is surging again, and it’s not just for industrial. Office and healthcare-related deals are now commanding more lender attention and capital than we’ve seen in over 18 months.

Why this matters for you:
📈 Lenders are becoming more confident in “real economy” assets
🏥 Medical office is leading the recovery
🏢 Class B office with strong tenancy is back on the radar

This shift underscores what we’ve been saying: the right sponsors with the right assets, like Streamline, are still getting deals done.

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MARKET SIGNALS

LA Brokers Say Market Has Hit Bottom As Office Investment Doubles

Office isn’t dead, it’s realigning. And new data out of Los Angeles suggests a comeback is underway.

According to Bisnow, office investment sales are showing signs of recovery, led by well-located properties with repositioning potential. While trophy towers remain challenged, Class B assets with healthcare and small business tenancy are gaining momentum.

Streamline is positioned exactly in this lane, and we’re seeing similar activity across the Phoenix MSA.

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WEBINAR FEATURE

David Hrizak joins Catherine Bell’s Webinar

In this conversation, David shares how Streamline is approaching capital deployment, risk mitigation, and long-term strategy across Phoenix’s healthcare-driven office market.

🏥 Why medical office demand keeps rising even as other sectors stall
📐 The power of vertical integration in today’s deal environment
📊 What it takes to deliver both returns and stability for high-income investors

If you’re looking for a blueprint on building passive wealth through commercial real estate, this one’s worth your time.