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BPM Real Estate Insights
Insights From Ani Vartanian, Managing
Partner of Rubicon Point Partners
By Greg Dresdow
In late May, we had a chance to speak with Ani Vartanian,
the Managing Partner of Rubicon Point Partners. Formed
in 2010, Rubicon Point Partners (Rubicon) is a private real
estate equity firm headquartered in San Francisco. To date,
the firm invests primarily in office buildings, although it has
also invested in other property types including industrial,
residential and some mixed use retail.
Where do you see the biggest
value opportunities today?
There are always opportunities, but they change over
time. To find our niche or opportunities, we focus on
demographics and company formations. We see residential
demand forecasting office demand. We have tended to find
opportunities in the urban or sub-urban markets. However,
now with the “Gen-Y” and millennials beginning family
formations, they have a need for more space, and maybe
more access to affordable education for their children. They
are looking to the suburbs. This trend has caused us to now
look at deals in the suburbs. There can be some opportunities
in the suburban markets. For example, there is a bit of a
value disconnect between an office building in downtown
San Mateo versus an office building in “suburban” San
Mateo. There seems to be a disproportionately unwarranted
discount to the suburban San Mateo building and there can
be opportunities in those types of markets.
Rubicon is primarily an investor in
the office market. Are there any
concerns today about Bay Area
office rents? Is there another tech
meltdown coming like we saw in
the late 1990s?
We have been concerned about office rents since 2015. Rents
seem to be running in parallel to the NASDAQ. When we
underwrite an office building today, we focus on a possible
downside scenario. What would happen to the target project
if rents dropped by 10-20%? Would we still buy the project?
We don’t underwrite a project today with strong rent growth
assumptions.
We don’t see an overbuilding situation in San Francisco, but
we are cautious about continual rent increases like we have
seen the last 3 years or so. I don’t see a tech meltdown like
we had in the late 1990s. These tech companies are so much
larger today, and financially capable, than they were almost
20 years ago now.
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