Leveraging Vertical Integration in CRE: Q&A with PEG’s Garett Bjorkman 

In today’s dynamic investment landscape, characterized by fluctuating interest rates, constrained capital availability, and heightened return expectations, vertical integration is emerging as a strategic advantage in the commercial real estate sector. By consolidating acquisition, development, operations, and asset management within a single organization, firms can enhance operational efficiency, mitigate risks, and maintain control over project timelines and budgets. The result? A level of control and agility that’s proving essential as market conditions shift more rapidly than ever.  

However, adopting a vertically integrated model requires a significant commitment of resources and expertise across various domains, from development to property management. Firms must assess their readiness to manage multiple stages of projects and ensure they have the necessary infrastructure in place.  

PEG Companies is a leading example of this approach. Under the leadership of co-CEO Garett Bjorkman, the firm is deploying capital across a vertically integrated platform targeting multifamily, build-for-rent, and select-service hospitality assets—sectors where operational precision can make or break returns.    

CM: In today’s uncertain market, what’s driving institutional capital toward vertically integrated platforms like PEG’s?  

GB: At PEG, sound and disciplined investment decision-making is always a top priority. However, during periods of uncertainty, the ability to make timely and well-informed decisions becomes even more critical. Our vertically integrated structure enables close collaboration across all facets of an investment, from development and construction to asset management and on-property operations. 

This integration enhances our ability to act decisively with real-time insights and collaboration, ultimately supporting stronger investor returns and reinforcing our commitment to being responsible stewards of investor capital. This model is a key reason why institutional capital continues to gravitate toward vertically integrated firms like PEG. 

CM: How are institutional LPs responding to this model?  

GB: In today’s challenging capital-raising environment, it is critical to clearly differentiate your capabilities and set your firm apart. Our vertically integrated structure resonates with institutional investors because it enables us to deploy capital more efficiently, reduce costs, and mitigate risk. By maintaining direct oversight and control across every stage of the investment lifecycle we enhance accountability, streamline and reduce costs in execution, and ultimately deliver greater value to our investors. 

CM: What are some tangible benefits of controlling the full lifecycle of an asset? 

GB: The tangible advantages of controlling the full lifecycle of an asset are evident throughout the entire investment horizon. During due diligence and closing, PEG leverages its in-house development and construction teams to thoroughly assess project scope, accurately estimate costs, and identify potential development and construction risks.  

Once operational, our team benefits from real-time insights and local market expertise through our on-the-ground operations professionals, enabling us to evaluate market dynamics and risks effectively. Additionally, our in-house capital markets team enhances our ability to efficiently analyze and source both debt and equity.  

Our investment and asset management teams draw upon all these integrated resources to support their strategies across the asset lifecycle. This structure not only improves the speed and quality of decision-making but also reduces risk by ensuring decisions are timely, data-driven, and fully informed. 

CM: How does vertical integration impact relationships with contractors, suppliers, and other external stakeholders? 

GB: One thing that contractors and suppliers are most sensitive to is time. The quicker and more efficient they are in executing, the more profitable they will be. This not only helps external stakeholders, but also the investment. The quicker a project gets completed, the quicker we can execute a business plan and generate returns.  

PEG’s vertical integration enhances this dynamic by enabling faster decision-making, issue resolution, and payment processing. This agility allows external stakeholders to operate more efficiently, ultimately driving stronger investment outcomes. This benefit is amplified when PEG Construction, as an internal general contractor, is utilized to execute upon one of our own investments. 

CM: Can you share a real-world example where this approach gave PEG a strategic edge?  

GB: We are currently undertaking a comprehensive renovation of a select-service hotel acquired last year. The project is being executed by PEG Construction, and we have seen tremendous value through collaboration with our asset management, operations, and corporate engineering teams. This vertical integration has enabled problem solving and resource sharing across departments, allowing us to effectively manage different scopes of the renovation to reduce costs and accelerate the timeline. 

One example of this synergy is the utilization of the hotel’s housekeeping team, whose workload is lighter during renovation, to assist with construction cleaning as the room renovations are completed. This approach has resulted in substantial cost savings compared to outsourcing the task to a third-party cleaning service.  

Additionally, our corporate engineering team has leveraged its experience to source and install key items that were unavailable through subcontractors, avoiding delays and further reducing expenses. Lastly, through direct relationships managed by our asset management team, we were able to source furniture at a significant discount compared to subcontractor pricing. These combined efforts illustrate how our vertically integrated structure creates meaningful value, both in cost savings and speed of project execution. 

CM: Are there specific market conditions or asset classes where vertical integration is particularly advantageous?  

GB: Hotels are one asset class where vertical integration offers distinct advantages. Unlike asset types such as multifamily or build-for-rent, hotels are highly transactional, operationally intensive businesses with larger staff and higher operating costs. These added complexities make it especially valuable to have in-house expertise readily available to support the detailed evaluation and underwriting process required of assets. Their insights help ensure our decisions are well-informed, nuanced, and tailored to the unique dynamics of hospitality operations and each individual market we evaluate. 

CM: You’ve mentioned multifamily, build-for-rent, and hospitality. How does the integration strategy differ by asset class?  

GB: At PEG we think of ourselves as one PEG team. Our vertical integration strategy does not differ greatly by asset class. The whole company offers support and the ability to flex where needed. While there are experts on the operations of each asset class, every other part of the company is there to support them and each of our assets. 

CM: How do you maintain agility at scale within a vertically integrated structure? Doesn’t it create more internal complexity?  

GB: Bringing all aspects of an investment under one roof does introduce additional complexity, simply because we have more to oversee and execute within the lifecycle of an investment. However, the overall value, efficiencies, and cost savings this approach delivers to investors far outweigh the added operational demands. By building the right teams and empowering them within a streamlined organizational structure, we can remain agile, even at scale. While we have clear processes and governance in place to ensure disciplined oversight, we place a great deal of trust in our people to execute effectively and make informed decisions in real time. 

CM: What trends do you see shaping the future of vertical integration in real estate and alternative investments?  

GB: Technology and artificial intelligence will be transformative in shaping the future of vertically integrated real estate investment platforms. Like many industries, we are already seeing meaningful benefits from real-time data and AI-driven insights, including enhancing decision-making, streamlining revenue and expense management, improving cross-functional collaboration, and strengthening end-to-end accountability. 

Beyond internal operations, technology is also redefining how we engage with our residents, tenants, and guests. Tech-enabled properties are no longer a differentiator, they are an expectation. When implemented thoughtfully, these technologies not only elevate the user experience but also unlock new operational efficiencies in the face of rising margin pressures and labor constraints. 

At PEG, we are actively exploring and deploying innovations such as generative AI tools to rapidly produce conceptual design plans and investment models, robotic solutions for room service, cleaning, and trash collection, and high-tech meeting rooms as an amenity in our hotels for the corporate traveler.  

As the industry continues to evolve, we believe technology will be an essential driver of scalability and performance for vertically integrated firms, providing the tools to make smarter decisions, operate leaner, and deliver stronger outcomes across the full investment lifecycle.