Family offices say higher interest rates have made them more selective about real estate, focusing on heavily discounted properties and assets with strong pricing power. Rob Haugen of Michels Family Office says the firm will only pursue especially attractive projects until it has strong conviction that rates are heading down, targeting yields on cost in the high single digits or double digits. Joel Houck of HB Wealth has seen more interest from large family offices in industrial warehouses, farmland and timberland, which can offer inflation protection and tax efficiency, and generally steers clients away from funds with leverage above 65%. Cresset views data centers as more of a technology investment than real estate because of the risk that a 15-year lease becomes less valuable as technology changes, while Haugen is wary of 10- to 15-year lock-ups at high interest rates.
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