Family office investing in real estate is becoming more selective as higher interest rates and uncertainty about borrowing costs raise the bar for new commitments. In comments published on October 23, 2026, investment executives described a focus on deeply discounted properties, assets with rental pricing power and restrained borrowing, alongside caution about long-term data-center investments.
Key Takeaways
- Michels Family Office is prioritizing exceptional property deals while interest-rate uncertainty persists.
- Rental pricing power and borrowing levels are central to assessing real estate’s inflation protection.
- Long commitments and technological obsolescence are making some managers cautious about data centers.
Table of Contents
- Family office investing raises the bar for property deals
- Inflation protection depends on rents and debt
- Data centers bring risks beyond the lease
- Conclusion
Family office investing raises the bar for property deals
Rob Haugen, who oversees private capital investments and mergers and acquisitions at Michels Family Office, said uncertainty over the direction of interest rates has made the firm more demanding about real estate opportunities. Haugen is also chief investment officer of its spinout, River1 Asset Management.
“Honestly, until we have really strong conviction that rates are headed back down, it's difficult for us to want to do anything except the really special project,” he said.
Haugen described opportunities such as buying an office building at a substantial discount with a known tenant set to occupy a large portion of the space. That combination ties the investment case to both the purchase price and identifiable demand, rather than relying solely on a recovery in property values.
Big-box retail is another area of interest. Haugen said the family office bought a Kohl’s property near Milwaukee with an investor consortium roughly a year and a half before his comments.
| Item | Details |
|---|---|
| Haugen’s target opportunity | Potential yield on cost in the high single digits or double digits; an investment target, not a reported return. |
| HB Wealth’s borrowing screen | Generally steers clients away from funds with leverage above 65%, whether at the operating-property or fund level. |
| Haugen’s lockup concern | Reluctant to commit capital for 10–15 years at high interest rates. |
Inflation protection depends on rents and debt
Joel Houck, chief investment officer at HB Wealth, said he has seen increased interest from large family offices in real estate and other real assets, including industrial warehouses, farmland and timberland. Inflation protection is an important attraction, but he emphasized that it depends on the asset’s structure.
“With real estate, your inflation protection comes from the ability of the underlying property manager to reset rental rates,” Houck said. Different property types do not reset rents at the same pace.
Houck pointed to industrial property and housing as assets where rents can be increased regularly, adding that both can benefit from supply constraints. Higher interest rates may also create discounted buying opportunities, although he cautioned investors to examine borrowing at both the property and fund levels.
Tax treatment is another consideration. Houck highlighted depreciation as a potential tax shield. The IRS guidance on residential rental depreciation explains that the deduction recovers rental-property costs over a prescribed number of years and separately addresses limits on rental losses. Those rules provide background on the potential benefit, not a guarantee that every property-fund distribution is tax-deferred until a sale.
Data centers bring risks beyond the lease
Interest in data centers has not translated into commitments from every wealth manager. Haugen expressed reluctance to accept lengthy lockups while interest rates remain high.
Mike Silverman, chief investment officer at Cresset, said clients frequently ask about data centers, but the firm has not pursued those opportunities because of the risk. He views them more as technology investments than conventional real estate investments.
Silverman said a 15-year lease with a major company can appear attractive, but technological change could leave the facility less valuable when that lease ends. His concern distinguishes the security of a tenant’s contractual payments from the property’s usefulness over the longer term.
Conclusion
These managers are describing selective deployment rather than a wholesale retreat from property. Their stated tests for future commitments remain the purchase price, rental flexibility, borrowing exposure and the asset’s usefulness beyond its current lease.
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Disclaimer
This FinanceVelix article provides general information, not personalized financial, investment, legal, or tax advice. Market prices, interest rates and economic conditions can change; investments carry a risk of loss. Facts reflect the material available when published and may change. Check important information independently and consult a qualified professional when needed. Mentioning an asset, company, or service is not an endorsement.
