After two years of price corrections, European commercial real estate is offering yields not seen since 2015. Family offices with long-term horizons are positioning for the recovery.
The Repricing Opportunity
European commercial real estate has undergone a significant repricing since 2023, with prime office yields widening by 100-150 basis points and secondary assets experiencing even sharper corrections. This adjustment, driven by rising interest rates and shifting work patterns, has created what many see as a generational buying opportunity.
For family offices, the attraction is clear: real assets with inflation-linked income streams, purchased at valuations that offer a meaningful margin of safety.
Sector Divergence
Not all real estate sectors are equal in the current environment:
- Logistics: Continues to benefit from e-commerce tailwinds, with vacancy rates below 3% in key European markets. Yields have stabilized at 4.5-5.0% for prime assets.
- Living (Residential): Structural undersupply across major European cities supports rental growth of 3-5% annually. Build-to-rent platforms are attracting significant institutional capital.
- Office: Bifurcation intensifies. Grade A sustainable offices in CBD locations command premium rents, while secondary suburban offices face structural vacancy challenges.
Debt Markets Reopening
After a period of extreme caution, European real estate lenders are selectively returning to the market. LTV ratios have tightened to 50-60% compared to pre-correction levels of 65-70%, but margins have narrowed from their 2024 peaks, making financing more attractive for well-capitalized buyers.
Looking Ahead
The consensus among leading advisors is that 2026 represents a vintage year for European real estate deployment. Family offices that can move decisively on quality assets, particularly in logistics and living sectors, stand to benefit from both yield compression and rental growth over the coming cycle.