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The flight to quality is no longer a forecast - it has landed, and the harder question now is what to do with everything on the wrong side of the divide. The Portfolio Strategy Tribe at CREAM UK 2026 examined an increasingly binary market, where the gap between future-fit stock and the rest keeps widening. With construction costs elevated and ESG expectations hardening, the clear direction was towards active, decision-led portfolio management - concentrating capital where it can deliver, and making earlier, harder calls on the assets that cannot.
Tribe Host: David Blair (tp bennett)
Co-Hosts: Anthea Harries (The Duchy of Cornwall), Tom Knight (The Portman Estate), Jonathan Theobald (Derwent London), Paul Smith (Barings), Ellie Toms (V7) and Miles Skinner (Union Investment Real Estate)
Summarised by: Bèlange Mitchell (The Land Collective)
A Structural Split, Not a Cyclical Wobble
The market has split, and the split is deepening. Best-in-class assets - those with strong locations, credible ESG credentials, and proven operational performance - are holding value and attracting demand. Secondary and older stock faces the opposite trajectory: rising capex requirements, obsolescence risk, and weakening liquidity are compounding pressure on buildings that were already underperforming. The Tribe was clear that this divergence is structural rather than cyclical, and that waiting for a broad recovery to lift all assets equally is no longer a credible strategy.
ESG and Performance Now Set the Price
ESG has moved well beyond reputational territory. It is now a direct driver of asset value and occupier demand, and - alongside location and operational performance - forms the new baseline for what institutional capital will back. Assets that fall short on any of these dimensions are becoming harder to finance, let alone exit.
From Passive Holding to Active Management
In response, investors are shifting towards a more active model of portfolio management. Holding for the long term is no longer the default position. Capital allocation decisions are becoming sharper, and the pressure to make explicit choices - rather than defer them - is growing across the board.
Biggest Opportunity: Selective Rebalancing Toward Future-Fit Stock
The strongest opportunity lies in selective rebalancing. Asset managers who move decisively to concentrate capital on future-fit stock, while actively managing or exiting assets that no longer merit it, are best placed to strengthen both resilience and liquidity across their portfolios. For assets where the fundamentals are sound but performance has drifted, targeted ESG upgrades and operational improvements can unlock hidden value. The key word is targeted - the Tribe was unequivocal that indiscriminate capex deployment is not the answer. The discipline lies in identifying which assets justify investment and which do not, and acting on that distinction consistently. Done well, this kind of rebalancing improves long-term resilience by concentrating exposure in the stock that will remain competitive as occupier expectations and regulatory requirements continue to tighten.
Biggest Challenge: The Stranded-Asset Dilemma
The hardest problem in the room was also the most common one: what to do with assets that are underperforming but do not clearly justify either full redevelopment or disposal. These stranded assets occupy a difficult middle ground - too problematic to hold passively, too costly or complex to fix, and too illiquid to exit cleanly. Rising construction costs are tightening viability across the board. When refurbishment costs are elevated and ESG expectations are non-negotiable, the number of assets where the numbers genuinely stack up is narrowing. Asset managers are being pushed into increasingly difficult conversations about whether to refurbish, reposition, or divest - decisions that carry both financial and reputational weight, and rarely come with an obvious right answer.
CREAM UK took place on 23 June 2026 at Fulham Pier, London.
Find out more about the event at space-plus.org/cream-uk
