What is the head of real estate at the sector’s second largest institutional investor thinking about these days?
Francois Trausch, chief executive at Allianz Real Estate, the real estate platform of German insurance giant Allianz, is thinking hard about the impact of tapering on real estate allocations, how the biggest tenants in its €60 billion-plus global portfolio of investments want to occupy space and how the portfolio might be over-tenanted.
“The day corporate bonds increase, investors may look at things differently,” he reflected in an interview with PERE on whether private real estate might experience a degree of capital attrition with interest rates rising.
On today’s office occupier trend of shorter, more flexible leasing, Trausch believes corporations will always want permanent space for large parts of their operations – even if increasingly supplemented by a degree of flexible accommodation. “Corporations do want to have a predictable view on where they have operations.”
As such, he does not see a time when “all of a sudden, an entire building is occupied by a shared office operator.”
Allianz’s office portfolio is currently 95 percent occupied, a level Trausch believes might be too high in the current environment, giving the firm little room for rental increases. When asked about tolerable risks, he said: “I’d have tolerance for more vacancy in my portfolio if I could.”
Allianz Real Estate was second in PERE’s Global Investor 50 ranking with $48.2 billion of equity committed to the asset class. To read more on the GI 50, click here.