The Unlocking Value Bulletin #18
Compute, Capital Discipline, and “Deployability” in CRE
Welcome to a new issue of the Unlocking Real Estate Value newsletter. Each week I will provide you with exclusive advice and professional insights to help you realise long-term value through real estate development.
January Offer: 50% off for everyone
Until 31 Jan, get 50% off a 3-month subscription. Cancel anytime.
Click here, the discount applies automatically.
Free subscribers just upgrade to the paid tier to claim it:
This week is about constraints: power, permits, and execution capacity. The best opportunities are no longer the best story, but the most deployable projects—where approvals, utilities, and buildability are controlled early. In parallel, sustainability and circularity are shifting from “ESG” to priced risk, through liquidity, insurance, operating costs, and tenant demand.
1) Italy: investors look beyond the real-estate scandal (Reuters)
The implication is procedural: planning credibility deserves a larger premium than many models assume. Investors will deploy, but will price uncertainty into timelines, legal robustness, and stakeholder management. Sponsors who can evidence a clean chain of approvals and defensible governance will earn tighter pricing than opaque peers.
2) Brookfield 2026: where large capital expects to deploy (LinkedIn)
This reads like a disciplined playbook: deploy where fundamentals carry the deal and the capital stack can survive. The underwriting filter is simple—income durability + refinancing resilience + manageable capex. If a thesis relies on rate cuts alone, it’s fragile. The best strategies assume volatility and still pencil.
3) PBSA: CDP launches PNRR call for new student beds (CDP)
This is a real feasibility lever, but it comes with governance and delivery discipline: eligibility, timing, affordability/use restrictions, and milestone compliance. The upside is strongest for teams that can industrialise delivery while moving permits fast. The risk is treating funding as “free money” and underestimating conditions and reporting burden.
4) Hines 2026 lens: sustainability conditioning returns (LinkedIn)
This isn’t ESG messaging—it’s liquidity and risk pricing. Comfort, energy performance, insurability, and regulatory compliance increasingly shape tenant demand and exit optionality. For value-add, mis-timed capex can destroy IRR. For core/long-hold, it becomes baseline quality. Either way, it’s now in the numbers.
5) London offices: Grade B spread and “sticky tenants” (LinkedIn)
If move costs and disruption are high, renewal probability becomes a material value driver—even for imperfect stock. That doesn’t mean Grade B is safe; it means value hinges on capex-light retention strategies and realistic leasing plans. Underwrite churn, incentives, and downtime aggressively. The A/B spread will be path-dependent, not a permanent constant.
6) Cat A waste: circularity becomes a real spec constraint (LinkedIn)
Cat A as “rip out and replace” is increasingly hard to defend economically and reputationally. The shift is toward reuse-first design, modular components, and procurement that anticipates tenant change without full strip-outs. Owners who make this easy for tenants reduce churn friction and protect NOI. Circularity becomes a leasing tool, not a reporting exercise.
7) $7T “cost of compute” and the scale of the AI build-out (McKinsey)
The takeaway isn’t “data centres are big.” It’s that deliverability is now the bottleneck: land control, grid access, permitting sequence, and construction capacity. For CRE, underwriting shifts from pure rent/yield to utility strategy, approvals certainty, and contract structures that increasingly look infrastructure-grade.
8) Energy becomes the constraint: OpenAI’s plan to manage data-centre energy costs (Reuters)
Energy is moving from an operating line item to a strategic constraint that determines where projects can exist. Expect more structured procurement (PPAs, grid services, behind-the-meter solutions) and tighter location screening. For investors, the first diligence question becomes: what is the credible power path, cost path, and timeline?
9) Infrastructure-style compute contracting: OpenAI–Cerebras deal (Reuters)
Long-duration compute supply contracts make AI feel less like software and more like infrastructure. That supports longer cashflow logic around hyperscale campuses and the supply chain around them (power, transmission, industrial ecosystems). Underwrite counterparty quality, duration, and delivery dependencies, not just pricing headlines.
10) JLL signal: global data-centre capacity could nearly double (LinkedIn)
If capacity expands at this scale, the edge shifts from “finding demand” to removing constraints. Winners will standardise entitlement, lock utilities early, and manage community friction. In practice: site selection becomes a stakeholder and utilities strategy exercise, not a simple GIS shortlist and a leasing plan.
11) Italy logistics: institutional liquidity still works (Dils + EQT) + EQT portfolio acquisition
Logistics remains one of the clearer “yes” sectors where assets are modern and genuinely Grade A. Dispersion is about spec: clear heights, yards, power, ESG, and functional obsolescence risk. Underwrite replacement cost and leasing depth at micro-location level. “Almost-grade-A” can trap capital once capex is priced properly.
That’s all for today. See you next week!
— Carlo
Founder and Managing Director Benigni
January Offer: 50% off for everyone
Until 31 Jan, get 50% off a 3-month subscription. Cancel anytime.
Click here, the discount applies automatically.
Free subscribers just upgrade to the paid tier to claim it:
This post is sponsored by Benigni a specialist development manager working with international investors to realise long-term value through optimised development strategies. To learn more click this link to our website.
Subscribe to the Newsletter
A newsletter by Carlo Benigni providing, in less than 4 minutes, exclusive advice, strategies, and resources to help unlock hidden real estate value.
Subscribe for free to receive new posts and support my work.