Thanks to the pandemic, a pivot to remote work, and a rethinking of how organizations use their office space have meant a seismic shift for commercial real estate operators and investors.
Against this backdrop, London-based U.K. real estate company Greycoat says a mix of the traditional with innovation to attract and retain tenants is key to real estate success in this constantly evolving environment.
For more than 40 years, the company has owned and operated real estate in the central London market, continually focusing on finding proprietary investment opportunities that deliver superior risk-adjusted returns. Greycoat management’s portfolio includes asset management and redevelopment of large and complex commercial buildings, and its diverse team of professionals maintains long-lasting relationships with the company’s investment partners, building occupiers, and market participants.
The company, founded in 1976, was listed on the London stock exchange for 21 years before becoming a private company in 1999. Since then, it’s provided high-quality investment and development expertise to third-party institutional investors, and beginning in 2012, has invested in and managed new projects with an enterprise value of £1.3 billion (approximately $2.4 billion).
Greycoat’s Traditional Beginnings
The evolution of Greycoat’s portfolio provides a unique history of the central London commercial property market and how specific styles of traditional real estate management and innovation have proven effective in varying market conditions. From 1976 to 1999, in a time typified by classical economic forces, Greycoat executed 54 projects totaling approximately 5.5 million square feet. These included the 350,000-square-foot Embankment Place — begun in 1990 as a redevelopment of the Charing Cross train station that incorporated new offices and retail space. Understanding how central London was evolving, at the time Embankment Place was envisioned as a major multidimensional development complex consisting of large uninterrupted office floors rising nine stories over the tracks, using an innovative and ambitious structural approach.
Greycoat also began the development of Moor House during this time — an office building that to this day occupies a prime location on the north side of London Wall at its junction with Moorgate. The site was initially purchased in 1987, offering short-term office leases — a popular market in the 1980s as market conditions lead to prolonged periods of letting and reletting. After a redevelopment completed in 2005 to provide for more permanent letting and other uses, the building remains one of the most prominent landmark buildings in the City of London, comprising around 327,400 square feet of Grade A accommodation.
During its first 20 years, Greycoat operated as a classic real estate investment company, originating ideas and developing them to fruition based on a keen understanding of the London market, the needs of the city, and incisive analysis of market fundamentals.
Going Private for Enhanced Decision-Making
The move from a publicly listed company to a privately owned firm provided Greycoat with the opportunity to assert more control and decision-making on its projects based on the objectives of its partnership. The period saw Greycoat focus intently on developing high-quality assets for a city increasing its demand for sophisticated office space.
During this time, Greycoat executed and managed 19 projects of around 4 million square feet, including Chesham House at 30 Warwick Street, and 101 New Cavendish Street.
Devonshire Square and the Cutlers Gardens Estates are a prime example of the work Greycoat was doing at the time. In 2003, Greycoat was retained as the asset manager of the spaces when Aon, its anchor tenant, was contemplating a move from the building to Canary Wharf. Greycoat quickly realized that the 12 buildings in the asset needed a fresh approach to acquiring and retaining tenants. The company refurbished and reposited the asset to incorporate retail-led landscaped courtyards, a hotel, and a residential building — and a rebranding that resulted in retaining Aon on enhanced lease terms.
Blending Tradition and Innovation in Commercial Real Estate
Since 2012, Greycoat has continued to grow with London, adapting through varying economic conditions to thrive in the commercial real estate sector. In the past decade, the company has managed 2.7 million square feet across 10 different projects, including the Lime Street Estate in EC3, 8 Salisbury Square in EC4, The Minster Building in Mincing Lane in EC3, and 21 Lombard Street in EC3. Greycoat’s choice of projects runs the breadth of historic London buildings like Vintners Place in EC4’s Upper Thames Street, to cutting-edge modern design like Tower 42 in Old Broad Street, EC2.
With each development, Greycoat seems to have a knack for understanding the needs of tenants — both now and in the future — and also the needs of the city as a whole.
In 2021, during the pandemic, Greycoat had the foresight to acquire a long leasehold interest in Stirling Square in SW1 when it came to market. The purpose-built office and residential building comprises around 110,000 square feet. Originally developed in 1999, the building was designed by the late Sir James Stirling.
Understanding that post-pandemic, tenants’ needs were evolving, Greycoat began refurbishing the building to facilitate a net-zero strategy, greater emphasis on health and safety concerns, and improved space for collaborative working environments.
Now, Greycoat focuses on adding value throughout the life cycle of buildings — from sourcing and acquisition to corporate management, leasing, asset development, and management.
As a manager, its services include securing third-party debt finance, corporate administration, and a full reporting service. As a lessor, the company focuses on building direct tenant relationships to drive value for its partners and clients. And as the commercial real estate needs of London evolve, as an asset and development management company, over 80% of its £650 million principal investment volume has been focused on opportunities with a heavy repositioning component.
With every step in its evolution, dating back to 1976, it seems clear that what’s driven Greycoat’s continued success has been an ability to understand the traditional while innovating to meet market demand.