Direct investment in real estate remains a predominant trend among family offices. This was a theme we heard recently at a real estate conference in Dana Point, California.
Typically created with a general partner or co-general partner structure, this method of investment offers control over a real estate asset for the duration of the deal, a critical feature for family offices focused on multi-generational investing, according to family office executives on a panel at the event.
Direct investment in real estate remains a predominant trend
among family offices.
Direct investing also allows for fast decisions around ownership, operations and finances, the executives at IMN: The 7th Annual Real Estate Family Office and Private Wealth Management Forum (West), said. The forum, held June 6-7, drew more than 300 attendees, including family office executives, investors, developers and service providers.
Indirect real estate investment opportunities typically come from relationships with sponsors who have established track records. Addressing the lack of transparency in indirect investing, some sponsors are using technology to provide greater operational clarity to investors.
Other themes we observed at the conference:
- Demand for lower-rent multi-family properties is on the upswing
- Development of last-mile retail distribution centers will continue, with a focus on strategic locations that can serve the suburbs
- Supply chain disruptions and rising material costs are pushing project costs higher throughout the real estate industry
- The ‘develop-to-core’ model, where developers provide soup-to-nuts offerings including development, construction and property management is gaining popularity, providing control at every stage of a project
The takeaway
While our family office clients are thoughtfully measuring the economics of deals in today’s inflationary environment, we have no doubt that they will continue to view real estate as a strategic bet.
