The world’s biggest commercial property landlord is shuffling its $378bn real estate deck.
Two moves by Blackstone — the sale of BNY Mellon’s London office in St Paul’s to Italian insurer Generali for £465m, sealed this week according to people familiar with the deal, and an approach to buy student housing operator GCP Student Living — are a sign of how landlords are repositioning their portfolios as the pandemic accelerates structural trends.
Covid-19 has hastened the decline of two key commercial property sectors — retail and offices — and prompted landlords to pile into alternatives they believe will fare better.
Top of their shopping list are: warehouses, supported by the ecommerce boom; rental flats and student housing, made attractive by home shortages and growing student populations across Europe; and life sciences campuses, buoyed by huge investment in research and development.
“These are megatrends which have . . . been accelerated by the pandemic,” said James Seppala, head of real estate in Europe at Blackstone.
A decade ago, offices and shops accounted for about 70 per cent of total European property deal volume, according to Real Capital Analytics. This year they account for 35 per cent, with the residential and logistics sectors gaining ground.
Mike Prew, an analyst at Jefferies, said the pandemic had accelerated the “value transfer” from retail to “beds, meds and sheds” — residential housing, healthcare and life…