Back
News

Waiting for the all-clear? There’s no time

EDITOR’S COMMENT Is it better to call the bottom of the market too soon or risk missing out because you let others move first? Blackstone president Jon Gray gave his answer as the investment house posted its first-quarter numbers: “The recovery will not be a straight line, but we are not waiting for the all-clear sign to invest,” Gray said.

It should be something of a virtuous circle: if big names such as Blackstone strike deals to get ahead of a recovery, it theoretically starts a shift in sentiment and hastens that upturn.

“We are pretty confident that commercial real estate over time recovers, and that foundation is starting to come into place,” Gray said, adding that the group is “quite focused” on European real estate, having secured $7.6bn (£6.1bn) for its flagship vehicle as of the end of Q1.

Gray delivered some good metaphors as he expounded on what comes next. This is a “time of seed planting”, he said, where you invest in a period of uncertainty and dislocation. Some of that activity could involve picking up distressed assets that owners cannot refinance, which Gray compared to when “something happened to a ship at sea and then it comes ashore”.

“We saw this after the financial crisis where real estate values bottomed in that summer of 2009, but you had negative headlines in real estate for the next three years,” Gray said. “We spent a lot of that time… deploying capital into that dislocated period where people were still cautious.”

Also eager to get ahead of a recovery is Far East Consortium, the subject of this week’s big interview. “Timing is everything,” said London regional general manager Matt Taylor, who estimates that ambitious real estate buyers such as his group have a window of somewhere between six and 18 months in which to seal deals before other residential players make their return and drive up competition.

FEC is on a big diversification drive that will include a fresh focus on build-to-rent – a market where activity is rampant enough to mean that sitting back and waiting for an absolutely perfect proposition could mean missing out altogether.

Elsewhere this week, we explore Grosvenor’s ambitions in the flexible office space. Now, this seems to be a story in which you could argue the protagonist is playing catch-up rather than getting ahead of the curve – surely any landlord with even a passing interest in running a flex or managed office arm had their act together years ago. But the team at Grosvenor argues that the company has quietly taken its time and stacked up achievements without drawing much attention. It has introduced flex offerings at 20 sites spanning 135,000 sq ft.

Now it’s doubling down, with plans to keep adding to that portfolio until it hits 300,000 sq ft. Three sites are lined up in London with more on the horizon, and head of flex offices Piers Townley said the next step is starting to think about the regions.

“We’ve got two or three [flex] opportunities in the regions which we are building the business case for,” Townley said. “And I expect next year that we will be looking to get one of those projects up and running.”

UK chief executive James Raynor said the group is “moving quickly” now that some momentum has been built. No waiting for the all-clear.

Send feedback to Tim Burke

Follow Estates Gazette

Up next…