Portfolio Insights

Jon Gray Joins ‘Talks at GS’

In an episode of “Talks at GS,” Jon Gray joins Alison Mass, Chairman of Goldman Sachs’ Investment Banking Division, for a discussion about the themes driving Blackstone’s investment approach.

In the video, Jon discusses two categories shaping our outlook: trends that have been temporarily disrupted by the pandemic, and those that have been accelerated.

Watch the full conversation above.

The three industries – global travel, location-based entertainment, and urbanization – that have been temporarily interrupted by the pandemic

In the past 50 years, global travel has grown at more than 5% annually.1 With the onset of the coronavirus pandemic, this trend has faced a sharp reversal, as people are cancelling nonessential travel and spending more time at home. Airports, hotels, business meeting areas, and other industries associated with business and leisure travel have all experienced significant disruption as a result – however, this disruption is cyclical, not secular.

Amid stay-at-home mandates, location-based entertainment – such as amusement parks and entertainment venues – has also been interrupted. A rapid trend towards urbanization, especially among young people, has also decelerated amid pandemic fears. But despite current dislocation in these industries, Gray emphasizes the importance of taking a long-term perspective: “fundamentally [we believe] they will return over time and that will create opportunities.”

The e-commerce, content creation and digital infrastructure sectors have seen rapid growth.

Global e-commerce retail sales were ~7% of total retail sales in 2015; in just five years, that figure has more than doubled, to 16%.2 The pandemic has only accelerated this trend. As Gray notes, logistics has long been one of our highest-conviction investment themes globally, and our ~850M sq ft portfolio is well-positioned to benefit from this growth.

He also comments on the rise in content consumption in recent months – worldwide, people are streaming more movies, TV shows, and music. “All of this content we’re watching on our devices needs to get made. And so, there are businesses that service content creation, there are advertising businesses tied to that, and then there are physical assets.” Blackstone Real Estate’s recent joint venture with Hudson Pacific Properties to acquire a 2.2M sq ft collection of Hollywood studios and office buildings is a testament to our conviction in the sector.

With the movement of school, work, entertainment, and other parts of life online, digital infrastructure –such as wireless towers and data centers – has become increasingly vital to ensuring businesses and educational opportunities can continue functioning and people can remain connected. Our Tactical Opportunities business’ recent investments in digital infrastructure are helping support that need.

Finally, the life sciences industry – where we’re active not only through our dedicated Blackstone Life Sciences platform, but also across our businesses through investments like BioMed Realty and Cryoport – has seen enormous momentum.

1. Source: World Bank Data. As of 1970 – 2018

2. Source: eMarketer. As of YE 2019