The adaptation of assets to reflect changes in occupier requirements, policy, technology and investor preferences has long been at the centre of real estate investment. For core managers, this means a focus on ensuring that assets are of consistently high quality while for noncore investors, it implies the transformation of assets.

The growing importance of ESG factors, including the focus on the transition to net zero, demands strong technical and policy skills by managers. The need to adapt to a complex, evolving and — sometimes contradictory — range of policy-occupier and investor-driven standards has narrowed the definition of core assets, increased capital expenditure requirements and meaningfully enhanced obsolescence risks associated with inaction.

These changes, however, have different implications for core and noncore approaches to portfolio management. One way to understand the implications is to explore them through the lens of the objectives and structu