In one of the most energetic and varied BossCast episodes to date, Orion Capital Managers co-founder Van Stults discusses redeveloping BT’s headquarters, a constant desire to evolve into new markets, and why all companies should be backing ULI’s UrbanPlan charity.

You can take the entrepreneur out of the Windy City but you can’t take any enigmatic charm or fervent energy out of Van Stults. The Chicago-born co-founder of Orion opened LaSalle’s first international office in London in 1990 and has never left. A decade later, as he explains to Blackstock Consulting’s Andrew Teacher, the company’s merger with Jones Lang Wootton to form JLL provided the catalyst for Stults and two LaSalle colleagues to form Orion Capital Managers.

Since then Stults has overseen Orion’s expansion into high-performing markets across Europe and the UK. Orion is now one of the leading pan-European private equity real estate businesses, with over €15 billion of investment capacity.

A veteran of many cycles from 1992 to 2002 to 2008, Stults labels “perseverance” the most important factor in starting and growing a business during periods of market volatility.

Now, against the uncertain backdrop for commercial office space and the pivot to ‘beds and sheds’ – residential and logistics property – as a defensive investment, Stults argues understanding “a combination of what you’re doing both for ESG and for tenant demand” will be key to cracking the future of the office for investors.

One of the firm’s most high-profile projects is the redevelopment of BT’s former headquarters, which he passionately describes as “awesome”. The deep retrofit of 81 Newgate Street was designed by Kohn Pedersen Fox Associates for Tejat V Lux Sàrl. The design will transform the imposing 1980s office block – full of rabbit-warren corridors and excesses from the past – into a sustainable, mixed-use building that is embedded in the wider public life of the City as a new gateway destination into London’s ‘Culture Mile’.

“We are using 70% of the existing materials,” he explains, “including window frames, for example.”

Smart investors have no choice other than to prioritise such details. “LPs are no longer cutting their portfolios solely by sector or geography,” he explains. “They’re doing so based on ESG metrics now too, so they will be culling buildings that don’t meet their standards.”

Stults suggests the emphasis for any office project going forwards needs to reflect the individual needs of occupiers, such as improving environmental credentials by deconstructing and reusing materials, rather than by simply demolishing buildings – wasting all of the embodied carbon stored in construction materials.

Stults moves on to discuss changes in appetite from investors and the future of beleaguered assets like shopping centres, arguing that “trends are moving faster; as soon as you have an idea, everyone has the same idea”. In repurposing retail, he points to Orion’s investments in shopping centres in towns like Telford as an example of the durability of retail as a sector.

Focusing again on Orion’s ESG and diversity and inclusion credentials, Stults is a long-term support of the Urban Land Institute charitable initiative, UrbanPlan, He argues for the need to support schools to improve diversity in real estate and calls on firms to back UrbanPlan alongside the likes of Landsec, Grosvenor, Legal & General, by making donations and by engaging with the charity by giving up time to lead its highly-rewarding programme of engagement. “I still say to young people that real estate is a great industry,” he says, “but I think we have to do a lot to attract and diversify and bring people in.”

Stults commends the Urban Plan, a charitable initiative run by the ULI which brings real estate into schools into areas with lower socioeconomic achievement. It has now reached over 2,500 pupils in over 100 schools since its launch with 400+ industry volunteers engaged across the country. The initiative aims to help young people understand the role real estate plays in society, and support the growth of social mobility and diversity in the sector by promoting careers in the built environment.

One of the most interesting parts of the discussion focuses on how “you [as an investor, need to] have the skills to move around”. Stults is energised by the firm’s evolution into new markets – such as build-to-rent – and is enthused by the opportunities ahead afforded by new types of capital and new asset classes, insisting that “you have to work harder for returns now”.

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Participants

Van Stults

Co-founder

Orion Capital Managers

Andrew Teacher

Managing Director

Blackstock Consulting