Sternlicht Says Starwood Is ‘Pencils Down’ In London Until There’s Brexit Certainty

Barry Sternlicht
Starwood International Ceo Barry Sternlicht

Starwood Capital is one of the many firms holding off on investing in London until there is more clarity on Brexit.

CEO Barry Sternlicht, speaking at the NYU Schack Institute of Real Estate in New York, said the U.S. private equity giant is “pencils down” unless an unmissable opportunity comes along in the UK, according to Bloomberg.

Sternlicht said that the firm, which raised a $7.6B opportunity fund a year ago, is seeing more opportunities in Europe than the U.S., but favours the Continent over the UK. It has bought two office buildings in Milan in the past six months.

In the run up to the date on which Britain was supposed to leave the EU, investment in London slowed dramatically, after two years of defying political uncertainty. According to data from JLL, £1.5B was invested in Central London offices in Q1 2019, 40% lower than the same quarter in 2018. Leasing volumes were also down 14%.

That said, there were nearly £2B of transactions close to completion, JLL reports.

And Starwood has clearly not gone off London entirely. In December it paid £255M for a South Bank Central 264K SF mixed-use scheme that is 99% leased. That was lower than the £280M asking price.

CORRECTION, APRIL. 9, 11.30 A.M. ET. This article originally stated that 110K SF at South Bank Central was leased when Starwood bought it. It was in fact 99% leased.

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