Blackstone’s Gray Expects Moderate Growth in Real Estate

Updated on

Commercial property is moving into a “moderate growth phase” amid limited construction and favorable demand, said Jon Gray, Blackstone Group LP’s global head of real estate.

While the rate of growth for commercial real estate isn’t as strong as in the past, supply and demand fundamentals remain good, Gray said in an interview today on Bloomberg Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle.

“We are clearly past the distressed phase,” Gray said.

Blackstone, based in New York, is increasing its investments in real estate, the company’s biggest segment by revenue and profit. The private-equity firm has commitments of about $1.5 billion for its first fund to buy stable, well-leased U.S. property.

Commercial-property prices nationally have surpassed the peak reached seven years ago, before the financial crisis sent real estate values plunging, Moody’s Investors Service Inc. said last week. Apartment complexes in large cities and office buildings in central business districts led the recovery, according to Moody’s.

Blackstone still expects investment opportunities in distressed property overseas, in countries including Italy, Portugal and Spain, said Gray, 44. The company last year agreed to purchase 18 apartment blocks from the city of Madrid for 125.5 million euros ($171 million) after home prices fell more than 45 percent from their 2007 peak.

“We’ve been active in Spanish housing,” he said. “That could be up to a 40 billion-euro space.”

The firm also is expanding in Asia and may make more purchases in Latin America, Gray said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE