Race for quality office assets in major cities spurred by ESG and limited supply – 2022 Global Investor Outlook reveals
December 08 2021 - 2:00AM
Leading diversified professional services and investment management
company Colliers (NASDAQ and TSX: CIGI) reveals quality office
assets in major metropolitan markets like London, New York, Tokyo,
and Sydney have retained their allure and will be in high demand
next year. Core and core-plus office spaces are the top global
strategy picks, with 60% of investors stating these as their
investment preference for 2022, a 50% increase from last year.
Their appeal not only stems from the realization that office
demand is here to stay, particularly in cities supported by strong
transport infrastructure and high amenity values, but also the ease
of large-scale capital deployment that office assets represent. The
rising cost of construction, viewed by 4 in 5 (81%) investors as a
pain point, limiting new builds, renovations, and retrofit projects
amplify the race to core. Investors expect core office values to
increase by up to or more than 10% over the next 12 months due to
the stark imbalance between demand and supply.
“Based on our 2022 Global Investor Outlook, pent-up demand and
delayed transactions will translate into momentum next year.
However, investors face an increasingly complex and competitive
marketplace, coloured by new regulations and COVID-19
uncertainties. With the amount of dry powder readily available,
offices in Tier 1 cities are seen as safe haven assets that offer
an attractive route to deploy capital,” said Tony Horrell, Head of
Global Capital Markets at Colliers.
Investing with intent
This year’s report shows ESG (environmental, social, governance)
considerations are prominent, with nearly 3 in 4 investors
integrating environmental factors into their strategies. This
desire to invest with intent is both a means of future-proofing
their assets and responding to stakeholder and societal pressures
requiring them to respond to the climate crisis.
Sustainability is creating a greater chasm between newer,
high-quality assets in prime space and older, second-hand stock in
city submarkets. To protect their portfolios, investors are
concentrating on Grade-A buildings that prioritize sustainability
and wellness credentials, while disposing of aging, non-compliant
assets that risk potential obsolescence if they are not regarded as
retrofit opportunities to capitalize. This recalibration of assets
under management will drive market turnover.
“COP26 has reinforced that the next 10 years are imperative to
the future of our planet,” said Chris Pilgrim, Director of Global
Capital Markets. “The pandemic, climate-related disruptions, and
growing recognition of social inequality are prompting investors to
adopt a more robust approach to sustainability-related risks. As
the number of ESG regulatory requirements continue to soar, we
expect investors will be rushing to sell potential stranded assets
to avoid discounted prices later.”
Partnership key to realizing diversified
portfolios
The pandemic introduced new risks and heightened others for
certain real estate assets. Investors are looking for more ways to
ensure their portfolios are resilient and diversified, exploring
specialized assets such as data centres, life science facilities,
affordable and student housing that benefit from their strong ties
to demographic and societal trends.
“Joint ventures, local partnerships, and M&A strategies are
great for savvy investors who want to get ahead. Alternative assets
present compelling investment cases, but their unique
characteristics make teaming up with the right partner essential.
There is a clear need for expertise to fill knowledge gaps and
safely guide capital, particularly those in nascent sectors,” said
Damian Harrington, Head of Global Capital Markets Research.
Other key findings from the Colliers 2022 Global Investor
Outlook include:
- Logistics:
Industrial and logistics assets are the most attractive asset class
overall, with 69% of investors choosing this as the preferred
sector globally, due to the surging demand for e-commerce.
- Retail:
Grocery-linked convenience assets are the most popular retail asset
type, accounting for 60% of the retail vote globally, yet some
segments of retail such as luxury high-street are making a
comeback. Shopping centres are ripe for conversion to last-mile
logistics or mixed-use assets, with 30-50% of investors expressing
interest in opportunistic and value-add strategies.
-
Multifamily/build-to-rent: Investors’ optimism
about the broad range of residential opportunities connected
closely to economic and demographic trends is driving higher
investment volumes in all markets in 2021. Multifamily is the third
most popular sector, with 42% of investors expressed an interest in
in 2022.
About the Colliers 2022 Global Investor
Outlook
The second edition of our annual outlook for global property
investors is based on a focused survey undertaken by 300+ investors
across the globe and in-depth interviews with our regional Capital
Markets leaders. The findings and opinions featured in the report
are shaped by their responses.
About Colliers
With operations in 65 countries, our more than 15,000
enterprising professionals work collaboratively to provide expert
advice to real estate occupiers, owners, and investors. For more
than 26 years, our experienced leadership with significant insider
ownership has delivered compound annual investment returns of
almost 20% for shareholders. With annualized revenues of $3.6
billion ($4.0 billion including affiliates) and $46 billion of
assets under management, we maximize the potential of property and
accelerate the success of our clients and our people. Learn more
at corporate.colliers.com,
Twitter @Colliers or LinkedIn.
Media Contact
Andrea CheungGlobal Manager,
CommunicationsAndrea.cheung@colliers.com416-324-6402
A photo accompanying this announcement is available
at https://www.globenewswire.com/NewsRoom/AttachmentNg/e04b6dab-b5ef-404f-8e65-f8fe0c7ad901
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