Heitman [Real Estate - North America]

2018 Real Estate Top 100 ranking: 35http://www.heitman.com

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Corporate overview

Founded in 1966, Heitman is a global real estate investment management firm. We operate in North America, Europe, and Asia-Pacific, in public and private markets, executing debt and equity strategies across the return spectrum. Through extensive research, innovative investment products, a seasoned management team, and hard work from some of the most talented professionals in the industry, Heitman has the experience and the resources to capitalise on opportunities and achieve our clients’ investment objectives. Our three complementary business units are:

  • Private Real Estate Equity: Investing in direct real estate in North America, Europe, and Asia-Pacific on behalf of our commingled funds and separate account clients
  • Public Real Estate Securities: Investing in publicly traded real estate securities in North America, Europe, and Asia-Pacific via separate accounts, UCITS portfolios, and a mutual fund, acting as a sub-advisor, and additionally participating in UMA programmes
  • Real Estate Debt: Origination and management of debt investments secured by real estate in North America.

Strategic corporate development

The firm’s five-year business plan is to continue to selectively grow assets under management across our three business units. We do not have any pre-specified limits on the number of accounts or assets under management, but instead focus on measured growth and a philosophy of only taking on new business when we are confident we can add value to our clients without jeopardising the quality of work for existing relationships. Our business plan is consistent with the firm’s mission, which is to be the leading real estate investment management firm by consistently outperforming benchmarks on both an absolute and risk-adjusted basis and by providing exemplary client service. We do not seek to be the biggest real estate investment manager in terms of assets under management, but rather to grow our business organically through delivery of strong performance and excellent client service.

Sector forecasts

LOGISTICS: Until recently, predicting tenant demand for logistics space was largely about estimating growth in industrial production. This is no longer the case. Today, retailers dominate industrial leasing activity as they build out their logistics network with an eye to serving customers however/wherever they want to shop. Department stores and small-shop mall tenants have been through this already. With Amazon’s push into grocery delivery, national grocers are being forced to follow suit. The largest grocer in the US, Kroger, plans to open more distribution centres than stores over the next two years. Strong retailer demand for distribution space has pushed the national vacancy rate to a record low of 4.7%. Demand remains strong across building size and location, as national retailers seek space in regional distribution centres and in last-mile facilities. Demand exceeded supply over the past seven years. That shifted this year, with demand and supply in parity.

OFFICE: National statistics do not tell the office story particularly effectively right now. While the national vacancy rate has stalled out at an elevated 12.8%, many markets are much tighter. The healthiest are cities where tech employment continues to grow. The San Francisco Bay Area has the nation’s lowest vacancy rate at 7.7%, despite significant recent office deliveries. Both downtown San Francisco and downtown Oakland are poised for further rent growth. Boston is among the nation’s leaders in rent growth, joined by Raleigh, Charlotte, and Orange County.

APARTMENTS: The long economic expansion in the US has given apartment developers time to build on the sites assembled prior to the Global Financial Crisis, as well as time to assemble and build on a new round of sites. In those submarkets that had the earliest recovery in demand and rents, typically city centre locations, developers are now building a third wave of supply. This surge in supply has outpaced solid demand growth, putting downward pressure on occupancies and rents. The exception has been suburban locations that provide tenants access to jobs and to strong school districts. Not-in-my-backyard movements in many suburbs have limited apartment construction even as it has proliferated in city centre locations, giving these amenitised suburbs an advantage in rent growth.

RETAIL: Strong recent growth in bricks and mortar retail sales has caused some to revise their assertion that the mall is dead. A more-nuanced view of the future of physical retail encompasses several realities. First, while start-up costs are low for online-only retailers, that business model is expensive to maintain and grow. As a result, hybrid models dominate, with retailers having both physical stores and a strong online presence. Second, that model has helped the strongest US shopping centres achieve a vacancy rate of only 2.3% as of the second quarter of 2018. Vacancy for the highest-quality centres continues to fall even as store closings continue at elevated levels while retailers pare their store networks. Retail owners continue to implement strategies to drive traffic to their centres, including adding complementary uses like co-working office locations, medical office, and residential.

Investment principles & strategy

Heitman is a research-driven investment firm. Our strategies reflect constant analysis of economic and demographic trends, property market shifts, and capital flows. In addition, Heitman’s various business lines include public market professionals, direct property investors, debt investment professionals and global resources, fostering a creative atmosphere within Heitman. This translates into an information exchange that helps us stay abreast of changing conditions in all areas of real estate. We then use this information to create innovative strategies, resulting in superior performance for our investors.

COMPLIANCE STATEMENT

Certain Heitman subsidiaries are registered with the appropriate regulatory authorities in the US and abroad and, as such, are subject to applicable regulatory schemes. These operating subsidiaries have implemented their own tailored compliance policies to insure adherence to governing rules and regulations.

News from Heitman [Real Estate - North America]

  • Heitman adds to its Real Estate Securities Group

    Heitman LLC, a global real estate investment management firm, today announced  two new personnel appointments designed to support the company in achieving its long-term growth objectives and delivering best-in-class performance to its clients.

News from IPE Real Assets

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White Papers / Research from Heitman [Real Estate - North America]

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Analysis from IPE Real Assets

Head Office
191 North Wacker Drive
Suite 2500
Chicago
IL 60606
United States
Contact
Tamara Solarich Tel. +1 312 912 6662
Company website:
http://www.heitman.com
Year Founded:
1966

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