Rethinking Real Estate: A Roadmap to Technology’s Impact on the World’s Largest Asset Class

By Dror Poleg

Technology is revolutionizing the way real estate is designed, operated, and valued. It is democratizing access to capital and information, changing the way tenants use space, and eroding the power of regulation. Billions of dollars are funding these new real estate technologies and operating models. Value is shifting away from the assets themselves toward those who understand the needs of specific end-users and can use technology to deliver comprehensive, on-demand solutions. With all of these developments, there is an urgent need for a resource that helps industry practitioners think differently about their investment, customers, and competition.

Rethinking Real Estate answers that call. It explores the impact of technology on all asset types — from retail projects, through lodging and residential properties, to office buildings and industrial facilities. Based on the author’s two decades of experience working across four continents alongside the world’s leading realestate investors, as well as hundreds of conversations with start-up founders and venture capitalists, this book provides practitioners with key insights, methodologies, and practical strategies to identify risks, take advantage of emerging opportunities, evaluate new competitors, and transform their organization, project, venture, or career.

Whether you are an investor, developer, operator, broker, lender, facility manager, designer, planner, or technology entrepreneur, this book will help you navigate the exciting period ahead.

           

• Language: English
• Publisher: Palgrave Macmillan
• Release date: Oct 31, 2019
• ISBN: 9783030134464

Book preview

© The Author(s) 2020

D. PolegRethinking Real Estatehttps://doi.org/10.1007/978-3-030-13446-4_1

1. Introduction: Real Estate Value in a Changing World

Dror Poleg¹ 

(1)

Rethinking Real Estate, Brooklyn, NY, USA

I had never seen such ugly cows in all the land of Egypt, said the Pharaoh. The lean, ugly cows ate up the seven fat cows that came up first. But even after they ate them … they looked just as ugly as before. Then I woke up.

Joseph listened intently and interpreted the dream as follows: the kingdom’s farmland was about to experience seven years of unprecedented yields, followed by seven years of drought. He told the Pharaoh that the abundance in the land will not be remembered, because the famine that follows it will be so severe. In order to prepare, Joseph advised the Pharaoh to collect all the food of these good years that are coming … to be kept in the cities for food.i

As the biblical story shows, humanity has been preoccupied with real estate yields since time immemorial. Even in ancient Egypt 3500 years ago, young upstarts were trying to guide powerful rulers to adopt more sustainable policies, reinvest their proceeds in new systems, and think strategically. And even the Pharaoh, owner of all the land in Egypt, was subject to disruption by powers that he could not understand or control.

Farmland is the quintessential real estate asset. It is valued based on its inherent characteristics and bears relatively stable and predictable returns. Unlike other real estate assets, it does not require expensive maintenance or complex ventilation or electric systems, and its value cannot be depreciated—at least according to the IRS.ii Farmland is also a scarce commodity and its ownership involves little-to-no interaction with customers.

Many of the words we now use to describe all real estate assets—landlord, yield, tenant, improvements—originate in the agricultural world. Many of the attitudes and assumptions we have toward real estate are equally ancient.

An Asset Like No Other

What makes something valuable? The answer may be clear to any reasonable person, but economists have spent hundreds of years arguing about it. Adam Smith and Karl Marx didn’t agree on much, but they both thought that the value of a thing was a function of the amount of labor required to produce it.

But how much labor goes into producing land? Figuring out the value of property, including the improvements erected on it, is a challenge. Marx struggled with the idea that land is essential to the production of everything but is not itself produced.iii If land is not produced, then its value cannot be equal to the value of labor invested in its production. So why should anyone pay for it?

Smith saw rent as a consequence of landlords’ power and not a result of any unique effort, stating that the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give.iv

Smith thought that being a landlord was an easy enough job. As he wrote in The Wealth of Nations, landlords’ revenue costs them neither labour nor care, but comes to them, as it were, of its own accord, and independent of any plan or project. This, in turn, led landlords to indolence, which is the natural effect of the ease and security of their situation. In 1844, Karl Marx quoted Smith’s view of landlords in his Economic and Philosophical Manuscripts.

A century after Smith, and not long after Marx’s death, economics went through a revolution that turned the idea of value on its head. A new group of thinkers arrived at the conclusion that things do not have a fixed, objective value based on the cost of labor that goes into them. Instead, the value of a thing is subjective—and it is the result of the utility it provides to an individual buyer. And because each buyer is different, things are worth more to some people than they are to others.

This means that simply owning something is not enough. To maximize the value of an asset, you have to market it to those who are willing to pay more for it than anyone else. This so-called revolutionary idea makes intuitive sense to any businessperson. Yet, in large part, many still assume that it does not apply to real estate assets, at least not completely.

As Professor Andrew Baum of Oxford University’s Saïd Business School pointed out, unlike other businesses, real assets are valuable even when they do not have customers or generate any income. Landlords are called landlords for a reason: they own land, and land is inherently scarce and is thus inherently valuable.v The assumption of inherent value still drives many real estate owners and operators to the indolence highlighted by Adam Smith and Karl Marx.

Real Estate Value 101

What determines the value of a real estate asset? Valuation professionals commonly refer to four characteristics:

1.

Demand: The quantity of people or entities who have the desire and ability to pay for the property;

2.

Utility: The ability of the property to meet the needs of prospective owners (and their tenants). The broader an asset’s ability to serve different needs, the higher its utility;

3.

Scarcity: The available substitutes for the property compared to the intensity of demand for it; and

4.

Transferability: The freedom to buy, lease, encumber, or sell the asset at will.

Based on the above, the ideal asset is one that meets the needs of the largest group of people, has limited substitutes, can be transacted freely by its owner, and exists within a reasonably liquid market. You may have noticed that there is a tension between utility and scarcity: if all landlords try to meet the needs of the largest possible group of people, the result will be an abundance of very similar assets—the opposite of scarcity.

How did real estate owners deal with this tension until now? The short answer is that they mostly didn’t. Real estate assets are special. They are built on land, which makes them inherently scarce and immovable. Land scarcity protects landlords from substitutes and frees them to develop assets that appeal to a broad range of end users. In other words, natural constraints allowed and encouraged them develop average assets for average tenants.

But scarcity is a double-edged sword. It makes it difficult for competitors to move in on your market (buildings can’t move). And it also makes it impossible for your own asset to move anywhere else. Other scarce resources such as oil and precious metals can be distributed to ideal customers who would pay the highest price. In contrast, real property is both a form of supply and a form of distribution; its ideal customer is whoever happens to need access to that location at that time. Once a real estate company makes a bet on a location, it is locked in.

Lock-in provides an extra incentive for landlords to develop assets that can suit the needs of different tenants in succession. If a building can’t move, it needs to be able to adapt. For example, a typical office space in Midtown Manhattan served a law firm during one decade, a media company during the next, and a financial services firm in the decade after that. In fact, many office buildings probably serve all of these tenants at the same time. The common areas, floor plates, and technical specifications in such buildings are designed to adapt to all sorts of occupiers. It’s no coincidence that office elevator music is synonymous with boring, vapid, and cheesyvi; the lack of character is a feature, not a bug.

This book argues that (1) technological innovations are undermining the natural scarcity of real estate assets; (2) being average is no longer a viable strategy; and (3) developing adaptable assets means something very different in the twenty-first century. We address these points in detail in the following chapters. Later in this book, we explore how real estate assets (as well as owners and operators) can evolve with the changing needs of tenants. But first, it’s important to understand real estate’s role in serving a very different group of stakeholders.

Real Estate’s Real Customers

Buildings are not just physical assets; they are also financial assets. This is particularly true for commercial real estate projects that are owned by large investors. It is also true for small houses that are owned by individuals but have mortgages that are lumped together into various financial products.

Real estate is not just a collection of assets; real estate is an asset class. Institutional investors such as pension funds, insurance companies, and endowments allocate the majority of their capital to traditional assets such as stocks, bonds, and cash. The remainder is invested in alternative assets , including real estate, venture capital, hedge funds, private equity , private debt, and commodities.

Alternative means that these assets have unique characteristics and their financial performance has low (or even inverse) correlation with other assets. Alternatives are expected to provide institutional investors with a cushion in times of economic crisis, a boost in times of moderate growth, value preservation in times of inflation, predictable yields to smooth out cyclical investments, or a general avenue to experiment.

According to the Willis Towers Watson’s Global Alternatives Survey, real estate accounted for around $1.4 trillion of the holdings of the largest 100 alternative investment managers in 2017.¹ This represents the largest share (35%) of all alternative investments.vii In addition, institutional investors are exposed to real estate through other investments in operational businesses (consumer goods, manufacturing, healthcare, etc.) and in real estate-backed corporate debt. The growing popularity of commercial real estate among institutional investors led some to argue that real estate is no longer an alternative, but an integral part of every large portfolio, alongside stocks, bonds, and cash.viii

Traditionally, institutional investors allocated most of their real estate investments to core assets with cash flows [that] are forecastable for long time periods with a low margin of error.ix As J.P. Morgan pointed out, these assets are attractive because their performance displays low volatility, they are not correlated with stocks and bonds, and their income stream (rent) is often indexed to inflation. The archetypal core asset is a well-built and well-located office building in a city like London or New York, occupied by well-capitalized tenants that signed long-term leases, with rents escalating annually based on the consumer price index or a similar mechanism.

Apart from core, institutional real estate investment strategies include:

Coreplus: investments in stable assets that can benefit from minor improvements while displaying limited downside risk;

Value add: investments in assets that can benefit from improved occupancy, more efficient operation, financial restructuring, or a modest face lift; and

Opportunistic: investments in new developments, adaptive reuse, emerging markets, distressed repositioning, and non-performing debt involving significant risk and the potential for high returns.

In conclusion, commercial real estate is a servant of two masters: the people who live and work within its buildings and the financial investors who own its equity or debt. Such investors prefer stable assets that generate predictable returns and are easy to exit. But in recent years, large investors have been pushed into more speculative investments.

The Alternatives Within Alternatives

As of Q1 2019, the world is awash with capital. Private equity managers are sitting on over $1 trillion of committed capital they are yet to invest.x Of that, nearly $300 billion is allocated specifically to real estate.xi More aggressive estimates put the amount of dry powder allocated to real estate alone at over $1.5 trillion.xii The glut in investment capital is creating competition for investors and drives up the price of quality assets.

As a result, investors who previously focused almost exclusively on core strategies are forced to settle for lower returns or make riskier bets in pursuit of higher yield.xiii Pension funds offer a case in point. Such funds have to make regular payments to retirees. These payments are more or less fixed and known well in advance. To be able to fulfill payment obligations, pension funds invest their members’ savings, hoping that the returns will match the size and timing of their obligations. Note that both size and timing are important: it’s not enough for a pension fund to make a great investment, it needs this investment to generate concurrent cash flows to cover monthly payments to retirees.

As of Q4 2018, the unfunded promises to workers by government pension funds was estimated to be somewhere between $1.6 trillion and $4 trillion.xiv In order to meet these obligations, America’s public pension plans have increased their allocations to opportunistic investments by a measure of six times between 2006 and 2016 while their exposure to core properties has remained flat.xv Institutional investors are moving from buy-and-hold assets like office and multifamily toward more operationally intensive alternatives such as student housing, aged care, self-storage, cold storage , schools, and data centers.xvi

As a UBS white paper pointed out, historically, the operational risks involved have put many core investors off entering into more alternative sectors.xvii But now they have little choice. This process also expedites the institutionalization of real assets that were previously too small for large investors. For example, commercial real estate now includes single-family homes, driving a consolidation of tens of thousands of small houses into huge, centrally managed portfolios.xviii Other niches, including cold storage and certain types of farmland, are also increasingly owned by large investors.

It’s important to note that the shift toward alternative real estate is not simply a result of investors moving money toward non-core assets. It is also a result of the traditional core assets themselves becoming less stable. A central theme of this book is that technological and cultural changes are making all real estate assets riskier. To be precise, these changes reduce the inherent value of real estate assets and make them more dependent on their operators and their distributors. This does not mean that real estate assets will become less valuable. It means that preserving and enhancing their value will require more active management. Management, in turn, will be increasingly reliant on technology.

Venture Capital’s High-Hanging Fruits

As we are writing this book, investment in technology is at an all-time high. In 2018, the venture capital industry invested $130.9 billion across 8948 U.S. venture deals.xix For the first time, investment eclipsed the high watermark set during the dot-com boom in 2000. But, as they say, this time it’s different.

And it is indeed different, in at least one meaningful way. As the name implies, the dot-com era was about the online world. Everyone was launching websites, companies were valued based on clicks and pageviews, and consumers were sharing digital music and video files. The top three spots on the world’s billionaires list were occupied by people who worked at software companies; two of them worked at Microsoft. Number 8 on the list was a fellow named Masayoshi Son, founder of Softbank Group, who was best known at the time for being the Japanese partner of Yahoo!.

This time it’s physical. As of July 2019, seven of the world’s top ten technology unicorns—venture-backed private companies with a valuation over $1 billion—are competing in offline industries with hard assets and complex regulation. This list includes WeWork and Airbnb in real estate; JUUL Labs in nicotine; SpaceX in space exploration; and Didi Chuxing, Grab, and DoorDash in logistics and transportation.xx Uber and Lyft, two other companies from this category, graduated from the unicorn club when they became public companies earlier in 2019.

Unlike their dot-com predecessors, today’s unicorns are not operating in a virtual Wild West, where the laws of gravity don’t apply and the laws of government have not yet been written. Instead, many of them are trying to change mature industries with entrenched competitors and complex regulation. It’s hard. And it requires a lot of capital. Even if they succeed, it is still not clear whether many of these unicorns will generate the type of returns that venture investors require and expect—which is why venture investors previously shunned many of these industries.

But investors no longer have a choice. More accurately, they have limited options. The low-hanging fruits have been picked: the industries that could be easily transformed have already been transformed. Investors must look for new industries that are large enough to justify the risks.

Real estate is an ideal candidate. It involves trillions of dollars in assets, it is highly fragmented, and it is rich with inefficiencies and untapped value. In recent years, the biggest names in venture capital have shown a growing appetite for property-related ventures. Sequoia Capital, Andreessen Horowitz, Greylock Partners, and Khosla Ventures have all made multiple investments in the space. Towering above them all is Masayoshi Son, who led Softbank and its various backers to multibillion-dollar bets on WeWork, Katerra, Opendoor, OYO, and Compass. Softbank is also the largest investor in other related sectors such as logistics, transportation, property insurance, and utilities.

In parallel, a new breed of funds emerged to focus exclusively on ventures that target real estate and the built environment. Such ventures are most commonly grouped under the terms PropTech, CREtech, or UrbanTech. Since 2015, fledgling managers such as Fifth Wall Ventures, MetaProp, Corigin, Tamarisc Ventures, and Urban.US have collectively raised over $1 billion. Their backers include property giants such as Hines, Prologis, Gecina , PGIM, CBRE, Cushman & Wakefield, and Mitsui Fudosan. Meanwhile, large property companies such as Brookfield, Blackstone, CapitaLand, Ivanhoe Cambridge, and JLL have set up their own dedicated venture funds or made direct investments into technology companies.

As Aaron Block and Zachary Aarons point out in PropTech 101, the real estate industry is finally facing a wave of tech-enabled innovation that is reshaping the ways in which property is bought, sold, leased, financed, designed, built, managed, and marketed.xxi Data from CREtech.​com, a real estate tech insights and intelligence company, estimates that over $50 billion have been invested in private PropTech companies since 2010. A separate analysis by Unissu, a London-based PropTech data and service provider, estimates a total of $70 billion in investment since 2000, with most of the activity occurring in recent years.

These numbers are significant. But the main impact on how real estate assets are used, operated, and valued will not come from real estate tech. Instead, it will come from innovations that are transforming other industries and changing the way people socialize, move around, eat, and find meaning.

Let’s see how.

Footnotes

1

The data is now two years old but such allocations change slowly due to the conservative nature of such investors and the illiquid nature of the assets in question.

Section IRetail

© The Author(s) 2020

D. PolegRethinking Real Estatehttps://doi.org/10.1007/978-3-030-13446-4_2

2. Retail Properties in Context

Dror Poleg¹ 

(1)

Rethinking Real Estate, Brooklyn, NY, USA

A lady walks into a store. It is different from any store she had ever seen. One could say it wasn’t exactly a store at all. Instead of stacked shelves and busy shopkeepers, the space is laid out like the living room of an expensive residence.

The store didn’t look like it was designed to sell, in the traditional sense of the word. Instead, it was designed to generate an emotional response; to entertain, to create an experience. Shopkeepers from earlier generations would have been perplexed by what an auditorium, a restaurant, an exhibition, and a roof garden were doing inside a store.xxii

Shopping had never felt so free: For the first time, the lady could circulate on her own, unattended, without interference from anyone.xxiii Her gaze falls on a pair of gloves. She reaches out, plucks them off the shelf, and tries them on. They feel good. She turns around and walks out without saying a word to anyone or paying for the goods she took. The street is full of people walking and cycling. There are no cars in sight. Is this the future of urban retail? Perhaps. But the scene above describes the department stores of London, Paris, and New York of the 1890s.

The woman was a thief. And she wasn’t alone: shoplifting by well-to-do women exploded with the advent of modern department stores.¹ Why would a woman risk stealing something she could easily afford to buy? At the time, the experts blamed retailers. In 1901, Dr. Paul Dubuisson published a study on the way stores were designed and described the special folly which seizes a woman the moment she crosses the threshold of a great department store.xxiv Dubuisson called this phenomenon the Department Store Diseasexxv: a form of female hysteria or unconscious behavior. Émile Zola, who was nominated for the first Nobel Prize in Literature, wrote of how women with the mania of stealing were victims of the temptation exercised on them by the department stores.xxvi

Such theories may seem sexist, classist, or plain ridiculous to twenty-first-century readers. But they were common at the time² as intellectuals tried to make sense of new consumer behaviors. One famous case was that of Ella Castle, a wealthy American lady caught red-handed stealing fur handwarmers in London in 1896. Following her release on mental grounds, the New York Times asserted that every reasonable and humane person will rejoice.xxvii Even Sir Arthur Conan Doyle, the author of the Sherlock Holmes detective series, wrote in the London Times that Mrs. Castle should be sent to the consulting room and not to the cell.xxviii

New retail experiences dazzled the senses, but one did not have to leave the house in order to shop. As economist John Maynard Keynes wrote about life at the beginning of the twentieth century, the inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep. Members of the middle and upper classes could enjoy at a low cost and with the least trouble all the conveniences, comforts, and amenities that were previously not available even to the richest and most powerful monarchs.xxix

Such was the period of the Second Industrial Revolution, from the 1870s to 1914. It was a perplexing time for retailers and consumers. Traditional markers of wealth and class were quickly eroding. Sophisticated advertising nurtured new social anxieties, driving some consumers to spend in order to show that they could—inspiring sociologist and economist Thorstein Veblen to coin the term conspicuous consumption in 1899.xxx Those who did not have enough to spend could access new forms of credit or installment programs.³ Shopping became an experience and a popular pastime. Global trade exploded, giving rise to new prosperity and dangerous trade tensions. The world felt like it was getting better and worse at the same time. And everything was accelerating.

Sounds familiar?

The rise of new retail concepts at the time was facilitated by innovations in manufacturing, mass media, and transportation. Trains reduced shipping costs and created busy central stations as well as shopping districts in the heart of cities; trams powered by horses and electricity contributed to the agglomeration of shops along high streets; newspapers and magazines with broad circulation made it worthwhile to invest in branding and standardization across regions and states; cash registers allowed family-owned retailers to open new stores and trust non-family employees; low cost or free rural mail made it feasible to distribute catalogs and goods to consumers in new regions; and new production methods brought about an explosion of consumer goods and drew more farmers to the cities.

During this period, several retail concepts emerged, including branded chains, mail-order catalogs, high street shopping clusters, and household names such as Macy’s, Saks, Bloomingdales, Le Bon Marché, and Barnes & Noble. After World War I, and more so after World War II, rising car ownership, growing urbanization, the expanded reach of the radio and, later, the television facilitated the emergence of additional retail concepts such as climate-controlled shopping malls , supermarkets, hypermarkets, convenience stores, specialized category killers, and fast fashion chains—as well as new retail giants such as Walmart, Kroger, Macerich, GGP, Toys ‘R’ Us, IKEA, Inditex, H&M, and Best Buy.

The department store, however, towered above them all (at least at the beginning). In fact, it is not an exaggeration to say that the emergence of the department stores was a watershed moment in the history of consumer society. What seems like a simple concept today was a triumph of audacity and innovation at the time, in many cases introducing real estate technologies such as elevators, escalators, massive glass windows, animatronic mannequins, complex lighting, heating, electricity systems, and even soda fountains.xxxi

Department stores also pioneered the use of customer data, including harvesting the addresses provided by children in their free playgrounds and following up with unsolicited direct mail to their parents.xxxii Stores drew constant media attention and allowed consumers to experience everything the world had to offer. They also served as cultural centers and exhibited new inventions that were not yet for sale, including the first airplane to cross the English Channel and the first color television.xxxiii

In addition to introducing technical and technological innovations, department stores were also cultural pioneers. In London, Selfridges was allegedly first to introduce lavatories exclusively for female customers.xxxiv In Tokyo, Matsuzakaya allowed customers to keep their street shoes on as they walked into the storexxxv—a faux pas in other establishments.

The presence of department stores at the heart of the world’s largest cities—in North America, Europe, and Asia—sparked heated debates and even violence around issues that went on to define the twentieth century, including the rights and behaviors of women and minorities, the destruction of traditional middle-class jobs, the ideological struggle between socialism and capitalism, and the impact of globalization on local culture. In the extreme case of Germany, vandalism and the burning of Jewish-owned department store buildings preceded the effort to eliminate the Jewish people themselves.

Today, retail is at an inflection point similar to the one at the end of the nineteenth century. In the U.S., department stores survived multiple challenges over the years, most notably the move of affluent (and mostly white) shoppers from urban centers to the suburbs in the 1950s and 1960s, and the emergence of new suburban competitors such as power centers and superstores since the early 1980s. But this time feels different.

In 2019, the world’s most delightful, perplexing, and menacing retailer is not a retailer at all—it is a technology company that operates a vast logistical network in tandem with the world’s most popular shopping website, Amazon.​com. And the everything store is just the beginning. An even bigger challenge comes from the other extreme from small, digitally savvy retailers that chip away at a single category of the department stores’ business, whether cosmetics, home goods, or apparel.

Department stores aren’t the only ones fighting for their lives. Other retail concepts and companies that thrived over the past 150 years are struggling to remain relevant. These include malls of various kinds, some supermarkets, apparel stores, category killers such as electronics and office-supply stores, and more than a few smaller stores with excellent high street locations. In the next few chapters, we explore: (1) the main drivers behind the transformation of all physical retail; (2) emerging retail uses and tenant categories; (3) the flow of retail spending to non-traditional retail spaces; (4) structural challenges to retail landlord innovation; (5) ways of monetizing physical space in a world of online and omni-channel sales; and (6) the innovation efforts of the world’s largest retail landlords.

But first, it’s important to understand retail’s significance to the real estate industry as a whole.

Retail Real Estate by the Numbers

Retail assets are a key component of the world’s largest real estate portfolios. The NCREIF Property Index (NPI) tracks the value and performance of office, apartment, hotel, industrial, and retail properties owned by or, on behalf of, tax-exempt institutional investors. In Q1 2019, just over 22% or $140.9 billion of the NPI’s value came from retail properties, third in importance only to office (35%) and apartment buildings (26%).xxxvi Combined with industrial assets—which are often used as retail storage and fulfillment centers—the total weight is as high as 39%.

Retail plays an even more important role in the public real estate universe, where smaller, non-institutional investors can buy shares in real estate investment trusts (REITs ). As of Q1 2019, the market capitalization of U.S. retail REITs was $171.5 billion, significantly higher than offices ($93.7 billion) or apartments ($121.3 billion).xxxvii Note that while investment in REITs is open to the general public, it is also popular among large institutional investors. Retail salesperson is (still) the most common job in the U.S., followed by retail-related categories such as cashiers, fast-food employees, and delivery truck drivers.xxxviii As a result, the performance of retail real estate assets is important to the financial well-being of society as a whole.

As impressive as those numbers are, they don’t tell the whole story. Most retail assets included in the figures above are self-contained projects such as single-building shopping malls, multi-building shopping centers, and standalone big box retail structures. However, a significant amount of retail space is located on the street level of office and residential projects, and its value is often included within the totals of those other categories. In some cases, large strips of high street retail (inline shops) are owned by a single landlord and managed as a single retail property. Queen Elizabeth, through the Crown Estate in the U.K., owns dozens of stores in London’s Regent Street shopping district, amounting to millions of square feet of the most valuable commercial space in the world.xxxix

Retailers themselves are also among the world’s largest landlords. Walmart owned 6869 properties across the world as of January 2018.xl Most of its portfolio consists of retail stores in the U.S., but it also includes logistical facilities and