“Caution for some, sure. But we also see bigger retail assets picked up by domestic investors,” Ludwig says, pointing to German family office Greve’s purchase of a Hamburg shopping centre from Generali in July.
Hands on approach
Family offices sometimes act like larger scale institutions by putting special purpose vehicles in place, or appointing wealth managers.
However, on the ground, the story is somewhat different, Ludwig explains, with private capital often capable of handling the day-to-day management of single retail assets.
“While we do see some retail real estate being handled by third party asset managers, properties such as high street retail are often simply managed in house, with a day-to-day janitor or caretaker in place,” she says.
With offices, which are often located on floors above, going through significant disruption due to hybrid work patterns, Ludwig says there are opportunities in some less prime locations for private investors to look at conversion into apartments, depending on costs of capex and rents.
“It’s something we are yet to see but I wouldn’t doubt private capital’s ability to take on redevelopment and conversion in such scenarios,” says Ludwig. “Development expertise is there and could be put into action with ideas for new, more mixed-use concepts.”
More broadly, how big a role private capital plays in retail real estate over the coming months remains to be seen.