Blackstone to Buy Stake in $630M UK Firm

BREP Europe V is acquiring a majority interest in The Office Group, which is expected to reach more than 1.1 million square feet of flexible workspace within the next 12 months.

Anthony Myers, Blackstone
Anthony Myers, Blackstone

Blackstone Real Estate Partners Europe V will soon claim a prominent position in London’s flexible office market as its own BREP Europe V has entered into an agreement with British entrepreneur Lloyd Dorfman CBE to acquire a majority interest in The Office Group, a top provider of design-led flexible workspace, in a transaction that attaches an enterprise value of £500 million, or approximately $630 million, to TOG.

It’s a timely investment. “The traditional workspace is being redefined in gateway cities across the globe, as evolving business practices increase demand for flexible office space to suit the needs of the discerning modern occupier,” Anthony Myers, head of European Real Estate at Blackstone, said in a prepared statement.

Established in 2003, TOG is not just a leader in its field; it is responsible for having introduced the flexible office space concept to Britain. Presently, the company caters to more than 15,000 members—a diverse group that includes the likes of AOL, Pinterest, British Gas, and of course, start-ups—providing adaptable leases of unique offices and co-working spaces at properties with meeting rooms, lounges and event spaces, the latter of which are also available to non-members. TOG’s portfolio of mostly London buildings stands at 36, but that’s just for now, as the company expects to expand to more than 1.1 million square feet with the opening of new locations within the next 12 months.  

Dorfman, chairman of TOG, bought into the company in 2010 and will continue to hold a minority interest in the business, as will TOG co-founders Charlie Green and Olly Olsen, who will remain co-CEOs. The transaction is scheduled to close in June, which will make for a notable follow-up to BREP Europe V’s recent final closing with €7.8 billion ($9.8 billion) of capital commitments and the new title of the largest ever dedicated European Real Estate fund.


The flexible office sub-sector is booming in London, propelled by the gig economy and technology sector, as well as larger corporations embracing co-working and collaborative space as a means of attracting talent, according to research released earlier this year by commercial real estate services firm Cushman & Wakefield.  “London’s co-working market—already the largest in the world—is only going to get bigger and expand more rapidly in response to workplace trends,” Elaine Rossall, C&W’s head of London Markets Research, notes in prepared remarks on the report. “The market will become increasingly competitive as it becomes further established and providers will need a strong brand and points of differentiation, if they are to continue to attract the necessary levels of tenants through the doors.”  

Blackstone isn’t the only U.S.-based investor that’s more than a little keen on London’s flexible office market. Just days ago, The Carlyle Group made its move into the city’s flexible office and co-working sector with three property acquisitions totaling 70,000 square feet, marking the first phase of the global alternative investment manager’s £150 million ($189 million) investment in the joint venture launch of the Uncommon office brand.