LONDON - With its striking facade, Palazzo delle Poste in the heart of Milan is one of the more elegant office spaces in Europe, hosting the likes of JPMorgan and Italy’s first ever Starbucks outlet.
Following a year in which remote working and social distancing have become well entrenched, leaving city-centre offices, retail and hospitality venues deserted, the richness of the deal may seem counterintuitive. At a time when almost $14 trillion of global bonds pay sub-zero yields, global real estate offers annual yields based on current prices of 3-4%, according to JPMorgan and Refinitiv data.
“Our focus is on creating the highest quality assets, based on what tenants will want tomorrow,” said James Seppala, Blackstone’s head of European real estate. But many investors interviewed by Reuters continue to home in on prime offices. Tenants will likely take a “hybrid approach”, with home-working and offices complementing each other, said Paul Kennedy, JPMorgan Asset Management’s head of strategy and portfolio manager for real estate in Europe.
Creative repurposing has morphed more than 200 U.S. shopping malls into warehouses, hospitals and even colleges.