When asked about real-estate developer Oxford Properties Group’s formula for success, executive VP and chief legal counsel Robert Aziz responds quickly. “It’s all about finding that sweet spot between risk and reward,” he says. “Establishing the proper balance in investment criteria and strategy is essential.”
Those investments are considerable. Owned by the Ontario Municipal Employees pension fund, Oxford Properties has ownership interests in more than 50 million square feet of office, retail, industrial, and multifamily residential space in North America and Europe. Its holdings include a half dozen Canadian Fairmont luxury hotels as well as residential complexes with more than 21,000 apartment units.
How to Succeed in Real Estate
Develop a clear and actionable strategy that includes which markets and asset classes you want to invest in and how you will capitalize those investments.
Resist going off strategy if a potential project looks enticing.
Form strategic partnerships with local experts who can help you learn the local market idiosyncrasies, lowering the risk of costly mistakes.
The old real-estate adage of “location, location, location” is still valuable, but ultimately it is “location, timing, and terms” that dictates whether your investment will make money.
Don’t enter partnerships without knowing intimately who you are partnering with. The best location in the world won’t compensate for a bad partner.
However, Aziz points out that this is only the beginning. In 2011, Oxford set in motion a business plan to double its assets under management from $15 billion to $30 billion by 2015.
Such an ambitious projection seems more than possible when you examine Oxford’s foresight and savvy approach to real-estate investments. For example, its expansive 26-acre Hudson Yards project in New York City, which is in the preconstruction phase of development, will encompass 7.5 million square feet of office space, 4,100 rental and for-sale residential units, a 500,000-square-foot retail centre, a 150-key boutique hotel, 1,800 underground parking stalls, a New York City school, and a cultural centre. The property’s value will eventually exceed $15 billion.
Hudson Yards is a textbook example of how Oxford Properties operates. First and foremost, the firm established effective partnerships. “We wanted to form associations with entities who were familiar with the New York City marketplace,” Aziz says. The results have been greater efficiency and significant cost savings on Hudson Yards’ start-up plans.
Next, Oxford demonstrated market flexibility with Hudson Yards, especially relating to current office ownership trends. “Right now, many large office users seek to own the building where they are located rather than be tenants,” Aziz explains. “They feel more comfortable owning the space where they do business in light of the uncertain real-estate market.” In response, Oxford is making it possible for corporate tenants to own their condominium office space within Hudson Yards.
The company’s flexibility is even apparent inside both leased and owned spaces. “We are offering a custom situation where companies can choose their own interior architectural design,” says Aziz.
However, perhaps the most significant in Oxford’s foray into new markets—and something that positions it well for continued growth—is its commitment to being a good business partner.
“We focus on building relationships with clients and partners,” Aziz says. “Unfortunately, it isn’t unusual for deals in this industry to fall through. However, we do what we say we’ll do when it comes to honouring commitments. By building a solid, stable reputation, we’re finding that more people want to do business with us.”
Meawhile, Aziz’s talent for accurately assessing risk means that Oxford deals—both now and in the future—have greater odds for favourable outcomes. “Any real-estate deal is speculative by nature,” he says. “There are so many variables to consider—from location and design to managing costs and attracting prospective tenants or owners.
“By determining whether the risk involved is measured and can be appropriately mitigated, I’m confident that we will continue to realize success for our pension-fund members.