Bolton a safer bet than Mayfair for UK Reit as Brexit looms
“a highly educated labour force is critical and a strong university system is required”. Would that take cities like Dallas and Charlotte out of consideration, or would being a couple hours from highly respected universities be good enough?
Costs are stated as an important factor as well. It’s “easy” to identify large metro areas with robust airports and deep, educated talent pools, but those tend to be tremendously expensive. Being in Seattle, Amazon surely sees how much being based in Seattle, which is cheaper than the San Francisco Bay Area, helps with recruiting. It might make sense for an expansion of five thousand employees, but will Amazon really try to hire 50,000 employees in a metro like Vancouver, San Francisco, Toronto, Boston, New York or Washington — an area that’s already expensive?
Tax incentives play a role too. To some extent this is a question of “who wants it the most”. For all other considerations, Chicago would be an attractive destination. But the city and state are broke. Are Chicago and Illinois willing to offer billions of dollars in tax incentives, trying to compete with younger, “hungrier” Sun Belt metros? And Chicago’s another metro area with no clear prospects for labour force growth, even if its existing talent base is large and deep.
There are some softer cultural factors that are difficult to quantify as well. Will flirtations with anti-gay laws under a guise of “religious liberty” (and anti-trans “bathroom bills”) hurt the causes of the large metro areas in North Carolina, Georgia and Texas? Will Toronto’s case be helped or hurt by the political environment under President Donald Trump? (After all, he has waged a personal war against Amazon.) Will Washington’s case be strengthened by Amazon CEO Jeff Bezos’s purchase of the Washington Post? Will geographic diversity — perhaps a place in a time zone other than Pacific — be seen as attractive?
This is the Olympics of corporate relocations. The winning city will be able to offer a large metro area, a deep and educated talent pool with a strong local university system, a robust international airport, sufficient highway and transit infrastructure, a reasonable cost of living, a welcoming culture, a business-friendly environment, likely eye-popping tax incentives, and a local business and political community able to work together to make a convincing pitch.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
(Bloomberg View) ONE of the best-performing UK real estate investment trusts this year is biting the Brexit bullet and doubling down on its home market.
Hansteen Holdings Plc, which in June sold its German and Dutch portfolios, says a booming e- commerce business and growth from small enterprises in the UK outweigh any anxieties surrounding Britain’s exit from the EU. Shares of the London-based member of the FTSE 250 Index have outperformed its peers almost tenfold in 2017, and are trading at the highest level in a decade.
“We are very happy to be focused on the UK now,” co- chief executive officer Ian Watson said in an August 25 interview. “At the moment, the Brexit worries don’t seem to be affecting either our occupiers or investors. Our units are in regions which we think are a good place to be, mainly outside London and the southeast, and we’re getting a new turbocharging by the whole e- commerce phenomenon. All the trends we are seeing play to our portfolio. Our marketplace is Bolton, not Mayfair.”
Hansteen, which mainly invests in industrial properties in regions outside London, is benefiting from independent retailers seeking affordable space to grow their businesses. Some of its tenants use Amazon.com Inc.’s platform to sell their products, Watson said.
“Often when you press ‘ buy’ on Amazon, the goods may not be in an Amazon shed, they may be with the retailer in another little unit, so they can come straight from there to your house. We have a lot of small units, basically just a square box, that are f lexible and the least expensive of any commercial property type,” he said.
Last year, Hansteen started recording whether new tenants retailed through Amazon, eBay Inc. or their own online retail platform. In 2016, 26pc of new tenants said they used one of those platforms; this year, that number has risen to 31pc.
The stock has proven a more lucrative bet this year than owners of UK shopping malls and office buildings bearing the brunt of Brexit. The shares have also outperformed peers like Tritax Big Box Reit Plc and LondonMetric Property Plc, which have also beaten the FTSE 350 Real Estate Investment Trust Sector Index this year.
Hansteen reported 2.8pc growth in net asset value per share for the six months ended June 30, citing strong demand and higher rents.
The company increased its interim dividend, saying it plans to return up to Stg£ 580m to shareholders by the end of 2017 from the proceeds of the German and Dutch sale.
Boston is one of the few American cities with the ability to meet Amazon’s criteria for its new ‘HQ2’
London isn’t the only Brexit safe haven for real estate investors