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Nuveen eyes opportunities in ‘brown discounts’ for old buildings

Michael Bleby
Michael BlebyDeputy property editor

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The office real estate head of US investment giant Nuveen says the growing split in value between high-quality, environmentally performing offices and older, dirtier building stock will lead to a “brown discount” that creates opportunities for new investors willing to invest in substantial upgrades.

The increasing “bifurcation”, or division between newer and older office towers will allow net returns in “mid-teens” percentages for investors renovating the latter, but lower-grade building prices need to fall further to justify the hefty investment needed, Nuveen managing director Chad Phillips said.

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Michael Bleby covers commercial and residential property, with a focus on housing and finance, construction, design & architecture. He also dabbles in the business of sport. Michael is based in Melbourne. Connect with Michael on Twitter. Email Michael at mbleby@afr.com

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    Original URL: https://www.afr.com/property/commercial/nuveen-eyes-opportunities-in-brown-discounts-for-old-buildings-20221003-p5bmqf