Inside the Strategic Moves of Multifamily Offices: Why Their Growing Influence in Commercial Real Estate Signals New Investment Opportunities
Family Offices Are Changing the Real Estate Game: Why Multifamily Offices Are the Next Big Play
High-net-worth family offices have long been key players in alternative investments, but a significant shift is underway: they are increasingly pooling their resources into multifamily offices to capitalize on real estate opportunities. This trend is more than just a capital aggregation—it’s a strategic evolution that savvy investors and advisors need to understand and leverage now.
The Power of Collective Investing: More Than Just Bigger Checks
Travis King, CEO of Realm—a multifamily office platform managing over $12 billion—puts it simply: “We are better investors collectively than we would be individually.” This isn’t just about pooling money; it’s about combining trusted relationships, geographic insights, and sector expertise to unlock deals that no single family office could efficiently access alone.
For investors, this means access to a broader, more diversified set of real estate opportunities without the heavy lifting of managing properties or building large internal teams. According to Preqin’s 2023 report, family offices are expected to increase their real estate allocations by 15% over the next two years, signaling a strong appetite for this asset class.
Real Estate’s Evolving Landscape: Why Multifamily Offices Have an Edge
Real estate is no longer a monolith. King highlights the importance of flexibility across property types and geographies to navigate macro and micro cycles effectively. For example, while institutional investors might be heavily concentrated in data centers and industrial assets, Realm focuses on lower middle-market deals under $50 million—an area often overlooked by larger funds but ripe for outsized returns.
This nuanced approach is crucial. A recent CBRE report noted that while data centers have attracted massive capital inflows, the sector faces potential oversupply and valuation pressures. Realm’s selective focus avoids these crowded spaces, demonstrating how multifamily offices can exploit niche opportunities with less competition.
Office Real Estate: A Contrarian Opportunity?
One of the most compelling insights from King is the view on office real estate. After years of pandemic-driven uncertainty, office properties in certain markets, like Northern California, are now trading at prices as low as 15% of replacement cost. This suggests a potential bottoming out and a contrarian buy opportunity for those with a long-term horizon.
For investors, this means re-evaluating office real estate not as a fading asset but as a deeply discounted one with upside potential as the market stabilizes. Advisors should consider integrating select office assets into portfolios, particularly in tech hubs where hybrid work models are driving gradual demand recovery.
What to Avoid: Timing and Overcrowded Sectors Matter
King advises steering clear of broad sector bets and cautions against jumping into overhyped areas like data centers at the peak of the cycle. This is a critical lesson for investors: real estate markets are cyclical, and timing, coupled with sector selection, is everything. The lesson here is to avoid herd mentality and instead focus on differentiated strategies where you have a competitive advantage.
Interest Rates: The Next Catalyst for Real Estate?
Interest rates remain a key variable. King notes that a reduction in rates would be a “wind to the sails” for real estate, boosting transaction volumes and asset values. Given the current Fed signals hinting at a potential pause or cut later this year, investors should prepare for increased deal flow and potentially higher valuations.
What Should Investors and Advisors Do Differently Now?
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Explore Multifamily Office Opportunities: If you’re a high-net-worth investor or advisor, investigate multifamily office platforms like Realm that offer access to diversified commercial real estate deals with lower minimums and shared expertise.
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Diversify Across Property Types and Geographies: Don’t put all your eggs in one basket. Look beyond the usual sectors and regions to capture micro-cycle opportunities.
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Consider Contrarian Plays in Office Real Estate: With office prices near historic lows in certain markets, now is the time to evaluate selective office investments for long-term growth.
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Avoid Overcrowded Sectors: Be cautious about jumping into overheated markets like data centers without a clear edge.
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Monitor Interest Rate Trends: Stay agile and ready to act as monetary policy shifts can dramatically impact real estate valuations and transaction activity.
Final Takeaway
The rise of multifamily offices pooling billions into real estate is reshaping how wealthy families invest in this asset class—offering scale, expertise, and access to better deals. For investors and advisors, embracing this collaborative model and adopting a flexible, cycle-aware approach could unlock superior returns in the evolving real estate landscape.
As the market cycles through uncertainty, those who combine strategic partnerships with disciplined sector and geographic selection will be best positioned to capitalize on the next wave of real estate opportunities.
Sources: Preqin 2023 Family Office Report, CBRE U.S. Real Estate Market Outlook Q1 2024
Source: How multifamily offices are playing commercial real estate
