Family offices are becoming more influential in commercial real estate as large institutional investors look for efficient ways to re-enter the market.
Over the past decade, high-net-worth investors have significantly increased their real estate holdings. According to the Knight Frank Wealth Report 2026, real estate accounted for just 2.6% of high-net-worth investors’ total assets in 2007. By 2023, that allocation had grown to 21%, giving family offices a larger role in shaping investment activity across major markets.
That growth is taking on new importance as institutional capital begins moving back into commercial real estate. Approximately $144 billion in institutional capital is expected to return to the market this year, creating both competition and opportunities for collaboration with family offices that have spent years building relationships, sourcing deals and controlling investment pipelines.
Brian Bullard, investment strategies and capital solutions chair at Polsinelli, told GlobeSt.com that the next cycle may rely less on traditional direct investment by large institutions and more on partnerships, joint ventures and specialized investment platforms.
The reason is partly structural. Institutional investors often need to deploy large sums of capital, but smaller transactions can be difficult for them to pursue efficiently. Each deal still requires underwriting, diligence and execution, whether the investment is large or modest. As a result, institutions often concentrate on bigger opportunities, even if smaller deals offer attractive risk-adjusted returns.
Family offices can help bridge that gap. Many are closer to the market, have access to off-market opportunities and operate with a longer investment horizon. They also tend to remain deeply engaged in market intelligence, even when broader institutional activity slows.
Bullard suggested that institutions may become more willing to share economics with experienced partners rather than simply trying to win deals by paying more. While large investors have the ability to outbid others, he said there appears to be less appetite for overpaying in the current environment. Strong deal quality and disciplined execution are becoming more important.
That shift could make family offices valuable not only as capital sources, but as operators of established investment platforms. For institutions, investing alongside a family office can provide access to expertise, relationships and a steady pipeline rather than exposure to a single asset.
Historically, family offices and large institutions often pursued different types of commercial real estate investments. Institutions generally focused on larger transactions, while family offices were more active in smaller or more relationship-driven opportunities. As both groups look for compelling deals in a tighter, more competitive market, those lanes are beginning to overlap.
The result may be a more collaborative investment landscape, where family offices serve as key partners for institutions seeking access to quality opportunities without relying solely on direct acquisitions.
Source: GlobeSt.