Real estate investors set up banks in offices as Europe is expected to recover
- Insufficient supply to support the European office market
- Post-pandemic work can increase space requirements
- Europe outperforms the US and attracts US investors
London, July 6 (Reuters) – After more than a year of working from home, real estate investors say the COVID-19 vaccination will begin and demand for office space in Europe will increase when people return to work. I am confident.
Global office property rents fell 31% year over year in the first quarter, but Europe proved to be more resilient than the US, according to real estate agent JLL.
“The impression that the office is over is complete nonsense,” says Keith Breslauer, managing partner of the European real estate investor Patron Capital.
“Nobody in smart money believes it.”
In one day last month, Breslauer tackled three new office development opportunities in a British provincial city. “We weren’t alone,” he said.
The long-term effects of pandemics on work patterns remain unclear.
Banking firm HSBC (HSBA.L) Deloitte, a consultancy firm, told UK employees they could work wherever they wanted and planned to cut properties in half around the world. US banks like Goldman Sachs (GS.N) and JP Morgan (JPM. N) I ordered the employee to return to the office. Continue reading
“Some will grow, some will shrink, and some will not change at all,” said James Cole, head of the private real estate group at Cohen & Stairs, an investment manager in the United States. (CNS.N) ..
“As a result of the recession, we always offer the best investment opportunities.”
According to Kol, the increase in hybrid work is offset by the need to increase office space per person during periods of social distance, away from the office a few days a week and the rest at home.
According to investors, supply bottlenecks before the pandemic are propping up prices, even if companies need 20-30% less space.
Simon Martindale, fund director at Mayfair Capital, said the property manager is arranging a large regional office to accommodate the UK for “big companies” looking for additional space.
According to analysts and brokers, the pandemic has hit large European companies harder than originally expected, backed by strong government support, and most continue to pay rent.
Matthew McCaulejye, JLL’s global research director, said U.S. centers like San Francisco and New York aren’t very resilient. Probably because venture capital and private equity tenants cannot enter into new leases any better than multinational corporations.
According to brokers, the pandemic has brought down investment transactions. When the deal came about, however, according to Real Capital Analytics, office prices in Europe’s central business district rose 13% between 2020 and 2021, while comparable retail prices in the US fell.
According to industry circles, US real estate investors are increasingly interested in Europe.
“Lots of overseas investors are ready to visit London to quarantine for building inspections and bids,” said real estate agent Savills.
Kennedy Wilson (KW.N) listed in New York Last week I bought an office building near the US Embassy in London for $ 252 million. That’s more than about $ 222 million reported for the sale of a building that was canceled in 2019.
LOCATION, LOCATION
Brexit and the “double storm cloud” of COVID-19 are disappearing, said real estate investor Madison President Ronald Dickerman.
Madison, Capital & County Investor (CAPCC.L) Last month, the owner of London’s Covent Garden shopping district bought a minority stake in the 37-story Salesforce Tower in the city’s financial district.
RE Capital plans to spend up to £ 150 million ($ 208 million) on offices in central London this year. Last year I bought a building in Westminster near the UK Parliament.
“When you look at the range of services on offer over the next few years, it is very limited,” said Simon Banks, UK Real Estate Director at RE Capital, adding that “location is more important than ever.” It was.
Employees may prefer to be close to major train stations because they pay attention to buses and subways, for example.
David Greenbaum, CFO of central European real estate firm CPI, said the pandemic hadn’t changed its approach to offices, which make up more than 50% of its portfolio.
Employees who loved working from home last spring are now missing out on training and collaboration opportunities, and his desire to work from home is likely to wane, he said. “The pendulum is always shaking.”
In cities like Berlin, vacancies are still very low, which supports the market, he added.
According to CBRE, rents in Berlin’s top offices rose by around 2% year-on-year in the first quarter, in Paris by more than 5%, while the West End in London remained stable. In Midtown New York, where there is a lot of vacant space, rents have fallen by more than 5%.
Camp worries
Investor interest in offices is increasing as logistics (warehouse) look expensive.
“Logistics returns have fallen 300 basis points from 7-9% to 4-6% in five years. It’s very difficult to make money in this area, ”said Patron Capital’s Breslauer.
Logistics companies are grappling with the cost of last mile deliveries and are encouraging trends such as pick-up locations in Amazon Fresh Stores and fast grocery delivery services in smaller urban distribution centers.
These changes and the return to regular shopping could cover the industry.
“Chasing an asset class is a lot of money,” said Zachary Gauge, a European real estate analyst at UBS.
“Logistics is a bit of a concern.”
($ 1 = 0.7224 pounds)
Report by Carolyn Korn Edited by Rachel Armstrong and Catherine Evans
Our criteria: Thomson Reuters Trust Principles.
Source link real estate investors set up banks in offices as Europe is expected to recover