Evergreen Opportunities To Focus On In Today’s Market

By Mia Brown
News • Thoughts
13th October 22

In the words of Warren Buffet – “when the tide goes out it’s a chance to see who’s been wearing bathers’’. We’re sat on the beach, binoculars ready.

Meanwhile, there are 2 key areas we’ll be continuing to focus on which we believe are evergreen.

Both have sustainability as a key plank running through them, but each are very different strategies.

1. The Return of Value Add

Gladly we see a return of interest in value-add strategies. But success will rely on a strong grip of your micro market dynamics, combined with competencies not every investor has needed to use in the last cycle.

This is a continuation of a bet we have been running for many years.

A more sophisticated demand for workspace led by a younger generation of business leaders, primarily concerned with attracting talent.

  • Refurbishment, refurbishment, refurbishment

Our governments’ commitment to Carbon Net Zero mean that knock down, redevelopment plays are becoming commercially unviable. Skilled, managed refurbishments will be required to extract value from real assets.

  • It’s the climate – stupid

Occupier demand, government regulation, investor demand and now structurally higher energy costs have converged to make it impossible not to be sustainable in real estate. It’s easy to burn cash in this space, mainly due to its nascency and the odd fund manager panic spending to get their accreditations in order!

  • Space as a service

Shorter lease lengths, higher quality spaces, outstanding digital infrastructure and strong sustainability credentials are required to command strong rents and attract the best tenants. A level of operations is required, which we believe many don’t understand or haven’t yet figured out. Think hotels – for office workers.

2. Sustainability – A Secular Approach

This is our big bet of the next 7-8 years.

85% of UK commercial real estate is EPC C or worse. The government intends to make anything below EPC B unlettable by 2030. This will bifurcate the investment market.

  • Well built, well occupied, sustainably certified = a small investable pool which will get larger as landlords improve credentials – but at a slower rate than demand from investors. We expect to see yield compression for the right stock.
  • Bias to occupier covenant, alternative use and location.
  • Value Add gains where accreditations can be easily and quickly achieved with relatively low investment.

Featured Stories & Insights

25th January 24

London Pulse: Commercial Leasing Insights 2024-2050

We sat down with Shaun Simons, Founder of Compton, along with Tom Kemp, Co-Founder, and...

Read More
24th January 24

TSP Launch ‘Next-Stage’ London Office Space

PRESS RELEASE TSP deliver 20,000 sq ft of bespoke designed, tech enabled and sustainably retrofitted...

Read More

8th January 24

Achievements to Aspirations: Reflecting on 2023, Projecting for 2024

2023: A year of strong success Against a backdrop of gloomy headlines and fluctuating interest...

Read More
28th November 23

The Notebook: Zac Goodman on why there’s life after WeWork for flex offices

AS FEATURED IN CITY AM, Monday 27 November 2023  Where the City’s top thinkers get...

Read More
26th November 23

Case Study: How We Transformed a Century-Old Building into Tomorrow’s Workspace

This November, TSP celebrates the completion of 60 Ironmonger. Over the past 11 months, we...

Read More
17th November 23

Rockbourne Unplugged: A Tale of Leadership, Legacy, & Achieving Real Estate Excellence

Rockbourne is a business focused on Leadership & Future Leadership Search for real estate owners,...

Read More

View all

Let's Talk

Got a question? Use the form to get in touch.

    Sign up to our newsletter

    For updates on commercial property news and events.