BGO bets on Texas with new office opening

The New York-based manager is opening its ninth US office with the aim of doubling or tripling its assets in the country’s second-largest state.

The old adage is that everything is bigger in Texas. A top 10 real estate manager’s presence now certainly is.

BentallGreenOak, the New York-headquartered real estate manager, is opening its ninth US office, which will be in Austin, Texas, PERE has learned. The new location will allow the firm to expand on its existing portfolio in the state. The firm currently manages more than $2.3 billion in properties and land for development in the US’s second-largest state, per a release seen by PERE.

“We’d like to double or triple that in the next two or three years,” John Carrafiell, co-chief executive officer, told PERE. “For that sort of growth and expansion you need a presence.”

The growth will be spurred by continued appetite for industrial and multifamily. The two property types make up 90 percent of BGO’s current portfolio in the state. Office is also a property type slated to be part of the expansion, with Carrafiell saying that Texas is one of the few office markets in the US the firm thinks will show continued growth in the next five to 10 years. Development projects on the more than 1,000 acres of land BGO currently owns is slated for multifamily, logistics, light manufacturing and tech-oriented business parks, he added.

Life sciences also figures to be a larger part of the product mix in Texas for BGO moving forward. Carrafiell acknowledged that the three major US life sciences markets – Boston/Cambridge, San Francisco and San Diego – still dominate the conversation, but newer markets such as Austin offer more growth potential.

“A tenant needs the best and brightest people in life sciences. I expect tenants will follow postgraduate degree students where those students want to live,” Carrafiell said. “When I entered the workforce, I went to where the job was. Today if you’re bright and capable, the job goes to you. And people want to live in Austin.”

Favorable demographics underpin the firm’s growth plans. BGO already has a strong presence in Dallas, Houston and Austin and plans to grow its presence in San Antonio, Carrafiell said. According to US census data, Texas experienced the most growth in population of any US state between 2010 and 2019, jumping 15.3 percent. Houston, San Antonio and Dallas all experienced 19-plus percent growth in that time period and trailed only Austin – the fastest-growing metropolitan statistical area in the US, with a 29.8 percent increase in population.

Ex-head of real assets for the Texas Treasury Safekeeping Trust Company Mike Leifeste has been hired to lead the new office. His official title will be managing director and head of Texas coverage. Leifeste spent seven years in his previous role, managing the investor’s 15 percent allocation to real assets and private equity energy investments.

More staff are likely to be brought on in the future to expand the office but further details were not disclosed. This is likely to occur in BGO’s other offices as well, which, alongside the headquarters, are in Chicago, Seattle, Los Angeles, San Francisco, Boston, Miami and Washington, DC. This makes the Austin office the firm’s first non-coastal presence.

Mike Leifeste has been hired from Texas Treasury Safekeeping Trust Company to lead the new office

No specific vehicles are slated to target the proposed growth in Texas, with BGO continuing to draw from its various pools of discretionary capital to fund projects there and elsewhere. “We have over $10 billion in dry powder,” Carrafiell said.

The firm is currently in the market with its fourth US fund, BentallGreenOak US Fund IV, per PERE data. The predecessor, GreenOak US Fund III, closed on $1.55 billion after initially targeting $1 billion. It also has massive buying power from its open-ended funds, BGO Diversified US Property Fund and Multi-Employer Property Trust, which have jointly raised $9.8 billion, per PERE data.