Jonathan Gray is less worried about the impact of government stimulus spending and more about an overheating economy as the country emerges from the pandemic.
During DLA Piper’s 2021 Global Real Estate Summit yesterday, the president & COO of The Blackstone Group told interviewer David Rubenstein, co-executive chairman of The Carlyle Group, that his concern is “almost the opposite—I’m worried about overheating.” He pointed to lack of spending, extensive saving and “lots of cabin fever” as a recipe for significant economic activity, resulting in real inflation.
That said, he views a number of real estate categories as ripe for opportunity:
- Hotels, as people return to traveling;
- Office markets, particularly those that are technology centers, because leasing demand will start to return;
- Last-mile logistics in response to the demand for e-commerce;
- Life science office buildings, particularly in Cambridge and South San Francisco;
- Single and multifamily housing, particularly in areas populated by creative talent.
Gray also reflected on the similarities between Blackstone’s strategies for persevering through both the Great Recession of a decade ago and the more recent pandemic challenges, boiling down to a few key steps as his advice for surviving economic crises because “you don’t know when the storm’s coming”:
- Acquire good businesses;
- Hold on to them;
- Have the right capital structure;
- Ensure you have liquidity to ride it out;
- Have the firepower to invest.
But he confessed that his favorite aspect of his work is the process of learning new businesses, geographies and trends, then developing a strategy for financial success.
Blackstone’s real estate group owns or operates a global portfolio valued at $378 billion and has $196 billion in investor capital under management. Its investments range from opportunistic to well stabilized, along with real estate debt through Blackstone Mortgage Trust.