我正在采访一家在填充地区收购A/奖杯办公室的公司。看起来他们正在保持创新，更多ESGfocus, and tech enabled buildings for better efficiencies and cleanliness. I'm a little concerned though as investors are more bearish on this property type as a whole, especially with these types of buildings. This would be my first RE related job. Would it be smart to start here to learn and jumpstart my career or find a firm that invests in a more favorable property type?
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Comments (9)
I don't think I've seen the words bearish and ESG in the same paragraph before...sustainable office buildings are hot stuff at the moment!
Now is the time to get into office especially if you are young. Almost everything else is overheated and competitive with less runway.
The flight to quality is real in office and it's the only thing trading these days in that class. Capital is willing to pay up for the best deals in the best markets right now. I'd be more focused on their capital stack and track record rather than the product type. Office probably gives you the most flexibility to move to a different asset class down the road as I personally think it's going to give you the best overall breadth of knowledge from an underwriting perspective.
If they're looking for deals in say a Chicago, St. Louis, Minneapolis, Philly then maybe I'd be a bit more hesitant given those markets have still struggled to recover and it might be a bit more difficult to execute. However, trophy buildings across the board continue to attract capital as tenants are demanding the best of the best in order to get their employees back in the office and fight for the best space in the market.
If you're worried about being pigeon holed to office for the rest of your life I wouldn't sweat it too much. Like I said, office gives you a great foundation to underwriting and understanding basic real estate fundamentals and if you find industrial or multi family more interesting 3-4 years down the road the transition will be easier than you think.
Agreed with this - if its a strong team with good track record and access to capital go for it. A group run by smart people who know what they're doing will know how to pivot if necessary, and if not office is a great asset to learn the basics.
My only disagreement with the above is that I think retail gives you the most flexibility down the road in terms of overall breadth of underwriting knowledge given the added importance of tenant performance to the overall health of the centre (i.e. if your anchors are failing to drive traffic all your other tenants suffer as well), and tenant mix in terms of driving an experience and complementary services. But hey, I started in retail so I'm biased.
I think most serious market observes believe office space is not "dead" due to the pandemic, I personally agree with this thought as well. The main fear of investors looking at office space centers around tenants reducing space, and older properties needing massivecapexto release/stay competitive (and a lot of that capex may be due to ESG factors). Worse, the properties most vulnerable to both space reduction by current tenants (if not outright vacancy) and needing major capex (that may not equate to much more in rents when done) are often the same buildings (think older "Class A" and especially B/C). High quality (generally newer) buildings have actually done decently well even in New York throughout Covid (there was a good JLL report on this a few weeks ago).
Just pointing out that their is a lot more complexity to this asset class and broad stroke statements good or bad are meaningless (this was/is true of retail when the "death of retail" became a popular headline...). Lots of opportunity for savvy investors and developers.
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Learn moreIf it's a credible team with access to capital and strong leadership team, you should do it! They can always pivot to a new strategy in the future that will enable you to still learn and grow. Some of the largest names are making strategic bets on office and flight to quality as discussed is real! During the second half of the year, you have seen anuptickin transaction activity in most markets around the country. Despite tech firms, AWS, Microsoft, Google provide work from home capabilities, all these firms continue to buy and lease office space. Follow actions not words and you will see the trend. Also, having a brand name resume won't hurt!!
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I started my career in office, and I honestly kind of miss it. Agree with others on the flight to quality, and certain markets in the U.S. continue to be strong office markets despite the pandemic headwinds. Can confirm that transitioning to industrial and multi will be fairly easy -- especially industrial (it's office lite).
Each product type will naturally experience their own cycles. Multi and industrial are going gangbusters right now but cap rates compress forever. Office will have its day in the sun again. If the company is well capitalized, has a great track record, and the culture is great, then I say go for it!
Office will give you a great underwriting foundation. Compared to other asset classes, you will be exposed to more complicated reimbursement methods, more granular turnover assumptions, more detailed loan covenants etc...
And given that office is threatened by the explosion of WFH and structurally negative changes to the US labor market, you will improve your creativity by being forced to make risky deals pencil over and over haha
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