Tom Steyer is again putting his money where his mouth is.
The 2020 presidential candidate, climate evangelist and California political bankroller launched a new real estate “investment strategy” this month under the umbrella of his investment firm, Galvanize Climate Solutions.
He’s planning to buy and retrofit multifamily housing, industrial buildings, student housing and self-storage units, and has hired Goldman Sachs real estate veteran Joe Sumberg to oversee the strategy.
This interview has been edited for length and clarity.
You’re in San Francisco, where the downtown is not doing great. Is this a good time to get into commercial real estate?
We’re going to be doing real estate, but that doesn’t mean we’re going to be doing office buildings. That could include multi-family. That can include student housing, that can include industrial.
Obviously, if you live in San Francisco, because I think we’re sort of the eye of the storm, there’s a real question about not whether there’s a need for commercial real estate, but how much of a need is there for commercial real estate in terms of square feet.
And obviously in markets where there is as much demand as there is supply, then a whole bunch of things happen, including when vacancies go up, and that means rents go down and all kinds of valuation issues come into play. It’s not trivial to take a big office building and, okay, if it’s not going to be an office building, what the heck is it going to be?
How are you going to make money at this? What are the risks and what are the returns that you’re expecting?
Real estate is a huge investment area. And within that we believe that this strategy of actually doing sustainable real estate is something which is going to have higher returns that have a huge tailwind to it. We believe that the climate response is a gigantic investable area. We’re dedicated to climate response, but we also believe that it will lead to higher returns because it has to happen and there’s a huge demand for it.
You’re planning to focus on the Pacific Northwest, Colorado, California, Arizona and Texas. What’s driving that: policy, high real-estate values, exposure to climate vulnerabilities?
Econ 101: Location, location, location. You want to be in places that have the characteristics of a positive market to be in. Part of that is just regular old real estate. And part of it is that we want to be in places where we’re going to be able to put this through in a way so that we make sure that it adds to the returns.
When Joe’s talking about it, he’s looking at places where we can make good real estate investments and dramatically reduce carbon footprints and have better returns as a result.
Are you counting on the Inflation Reduction Act for anything?
We have people who are policy