This article is sponsored by Harrison Street.
What were your firm’s key events in 2022?
In 2022, when much of the traditional real estate market had seen a dip in activity and many investors slowed down investment allocations due to shifting inflation figures, interest rates, and valuations, we were able to capitalize on dislocation in the market to find attractively priced opportunities. The opportunities we pursued were aided by demographic-driven tailwinds across alternative real assets, which we’ve seen persist throughout the market cycle.
During the year, we grew by 24 percent to $55 billion in assets under management, and strengthened our relationships with 560 investors across 25 countries.
What has the operating environment been like?
Harrison Street’s targeted sectors – including student housing, senior living communities, data storage and build-to-rent properties – benefit from global demographic-driven trends and historically demonstrate cycle-resiliency and defensive characteristics.
Further, these highly fragmented asset classes generally have short-term leases, which allow rents to re-price more frequently in today’s inflationary environment. This has resulted in a healthy operating environment across alternative real assets, which has been marked by record-level leasing and rental growth, particularly in student housing and storage properties. Looking forward, tailwinds for alternative real assets remain robust and we believe they will continue to generate attractive performance in varying market environments.
What key challenges did you have to overcome?
Harrison Street was not immune to the liquidity challenges that began to surface last year as the Federal Reserve pushed forward with the largest and most rapid interest rate hikes since the 1980s, creating a headwind for capital-intensive businesses.
In addition, as a result of the drop in public markets, investors were managing through meaningful denominator impacts to their real assets’ allocation. This combination saw transaction activity across the industry slow down dramatically, as the bid-ask spread widened and capital moved to the sidelines.
Harrison Street was able to tactically navigate around these and other macro headwinds with what we believe is an unrivaled network of operators, deep lender relationships and a strong global client base.
What or who is responsible for your success?
Our success can be credited to our talented team, our unique focus on selected resilient asset classes, and our commitment to innovation, integrity and investment discipline.
Last year, we made 71 strategic hires in London, Toronto and San Francisco, and opened an office in Tokyo. Our success was also driven by our long-term partnerships with the best universities, health systems and operating partners in the business. We’re pleased to continue our global growth and build on our legacy as a first mover in demographic-driven real assets.