A new breed of commercial real estate business launches this week following acquisition of its first site in a £200m operational real estate portfolio drive. Challenging the traditional model of a developer leasing to an operator, Compound provides enhanced risk adjusted returns for investors, better quality, more sustainable buildings and improved experience for consumers by offering an end to end service, from site acquisition and development to the day to day running and marketing of its buildings.
Compound is initially concentrating on the overlooked consumer industrial market, with key uses for sites including Multi Let Light Industrial, Self Storage, SME Workspace and Open Storage Land. Having acquired and being in the design and planning phase for a 90,000 sqft site in Kent along with a further 150,000 sq ft of future pipeline identified in London and the South East, the business, together with a leading UK Family Office have committed to deploying £100m to expand its portfolio through the acquisition of another 8-10 sites across the UK during 2023/24.
Unlike most new industrial supply – which continues to be absorbed by larger e-commerce and 3PL occupiers – the portfolio will be developed as a series of customer centric ‘micro fulfilment hubs’ for the burgeoning SME and consumer end of the warehousing market. The company promises flexible and dynamic leasing along with a high impact, community focused approach to development and operations with commitments including prioritising local businesses, artists and designers across its supply chain as well as maximising on site energy generation and achieving BREEAM Excellent on all new build development.
Compound’s founder Jacob Sandelson was formerly a Principal at leading real estate developer General Projects and CEO of its serviced office business General People. His vision is to eliminate the disjointed structure of existing operational property businesses by centralising every aspect of the build and running of the sites. The company aims to become a market leader in the operational real estate space with possible future sectors including Micro Retail, Urban Leisure and Dark Kitchens. This model offers investors the opportunity to increase their exposure to operational sectors without the risk of leasing to a tenant or the burden of becoming an operator themselves.
Commenting on the launch Sandelson said: “Our ability and experience in combining operations with investment and development will allow us to navigate a challenging investment horizon. At the same time we will improve the user experience, design quality and community impact across countless sectors that are ripe for disruption. We differ from the traditional real estate model as we are much closer to being an operator than just a property developer. In a world where businesses have to work harder to hold on to consumers, you need to be completely in touch with your customer. Our model allows us to do just that whilst generating enhanced returns for our investors and the communities in which we operate”.
Compound has built an impressive team including a specialist board of directors and a tier one operational partner to provide a seamless integrated service. With the strength of this team behind him, Sandelson is confident in the delivery of the first of his long term strategy – a £200 million portfolio of design led, green and positively impactful operational industrial assets across the South East. With planning targeted later this year on the first site, Compound’s portfolio will be operational in Q3 2024.
This story was covered in React News