Understanding the Current Deal Flow Dilemma for Family Offices

Family offices are in a unique position. With patient capital, long-term goals, and the flexibility to think generationally, they have a natural edge over more reactive players in the market. Yet, even with all that going for them, many are currently facing an unexpected and frustrating reality: meaningful real estate deal flow has slowed to a crawl.

When interest rates began to climb and inflation fears took hold, many anticipated a wave of distressed properties hitting the market. Office buildings facing vacancy issues, overleveraged developers caught mid-project, and commercial owners looking to offload multi-unit or mixed-use assets quickly were all expected to show up in the pipeline. But that hasn’t happened. Not in volume, and not with pricing that reflects the risks buyers are being asked to take on.

Instead, what has emerged is a slow, awkward standoff. Sellers remain anchored to pre-rate-hike valuations, unwilling to adjust expectations even when properties are clearly underperforming. Meanwhile, buyers are operating in a very different underwriting environment, one where exit assumptions, cap rates, and financing costs are far more conservative. That gap in expectations is stalling transactions, and many family offices are left on the sidelines, waiting for pricing to adjust.

The Distress That Isn’t (Yet)

Everyone expected distress. It made sense on paper. Rising rates, tightening credit, and maturing loans should have created urgency among owners, especially those holding transitional assets or floating-rate debt. But what has surprised many is the resilience of these owners. Thanks to lender flexibility, rescue capital, and alternative financing sources, many borrowers have found ways to delay selling or restructuring altogether.

This delay has kept the market in limbo. The distressed deal volume is low, and when assets do surface, they’re often priced closer to peak valuations than buyers are willing to accept. For family offices that have patiently waited on the sidelines, hoping to deploy capital into discounted opportunities, the pickings have been slim.

The Battle for Value-Add Is Fierce

While truly distressed deals are scarce, value-add opportunities still exist – but they’re no secret. Institutional capital has increasingly turned to this segment of the market, seeking higher yields in a risk-adjusted environment. As a result, the competition for well-located, underperforming multi-unit and mixed-use assets has become intense.

Family offices, which often prefer to move with deliberation and perform deep due diligence, find themselves at a disadvantage in competitive bidding situations. When a well-positioned value-add opportunity hits the market, say, a 30-unit apartment building in a core location with upside through renovation and lease-up, it’s not uncommon for it to be under contract within days, often at aggressive pricing.

The same applies to mixed-use assets. Urban properties with both residential and ground-floor retail components, once considered niche or overly complex, are now drawing interest from larger funds hunting for diversity and flexible income streams. For family offices used to working in quieter waters, the influx of competition has raised entry points and compressed returns.

Off-Market Is No Longer Optional

The most attractive deals today rarely see the open market. They’re traded quietly, through networks built on long-standing relationships with brokers, property owners, or operating partners. For family offices that lack these hyper-local connections, the chances of accessing true off-market or direct-to-seller opportunities are limited.

In the past, it may have been possible to review on-market listings and uncover diamonds in the rough. That window has closed. Without boots on the ground or aligned local operators, many family offices are missing the first, and often only, look at deals that fit their investment profile.

There’s also a trust component. Sellers and brokers who control in-demand properties want certainty. They gravitate toward buyers who have a track record of closing, who understand the asset class, and who can move without red tape. This puts family offices at a disadvantage unless they’ve already built that reputation in a given market.

How to Navigate the New Normal

The current market demands a more proactive and relational approach. Family offices seeking deal flow in this environment need to consider a few strategic shifts.

First, deepen relationships with experienced local operators. Whether pursuing multi-unit residential or mixed-use commercial properties, partnering with teams who know the submarkets, have access to brokers, and understand permitting and entitlement risk can be the difference between waiting and winning.

Second, reframe the definition of distress. Instead of waiting for fire sales, consider targeting under-managed properties or sellers fatigued by complexity. Many of these opportunities aren’t distressed in the traditional sense, but they offer inefficiencies that can be corrected with capital and attention.

Third, invest in speed and certainty. This doesn’t mean cutting corners on underwriting, but it does mean being prepared. When the right deal surfaces, having internal alignment, pre-structured investment vehicles, and financing partners ready can set your offer apart.

Finally, build your own pipeline. Relying solely on brokers means competing with everyone else. Direct-to-owner outreach, localized data scraping, and community-level networking can uncover opportunities that never hit the public market.

Final Thought

Family offices have always thrived by playing the long game. This market cycle is no different. While the current deal flow may not be as robust as expected, the fundamentals of real estate investing remain the same: relationships matter, preparation creates opportunity, and disciplined capital always finds its moment.

The key is adjusting expectations without losing your edge. Multi-unit and mixed-use properties continue to offer compelling potential, but accessing the right ones now requires more intentional effort than ever before. The opportunities are still out there. You just have to be ready to move when they reveal themselves.