PERE’s 2025 Value Creation & Asset Management report explores the trends shaping value-add strategies
Creating value in today’s market involves alignment and integration. Sustainable improvements are driving up value by increasing performance and reducing costs. Meanwhile, managers and investors are forming ever more important partnerships to competitively leverage new technologies, asset-level strategies, global data and local insights to drive increased valuations and returns across buildings and portfolios.
INSIDE THE REPORT
Five real estate trends adding value to private equity’s playbook
Tighter capital markets, regulatory pressures and evolving tenant expectations are creating a new blueprint for the value-add investment strategy.
Arrow Global on creating value through active management in Germany
Current market dynamics offer the opportunity to acquire ‘special sits,’ assets at attractive yields-on-cost, says Arrow Global’s Stefano Giardina.
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Creating value in today’s market involves adaptation. Sustainable, energy efficient improvements are driving up value by increasing building and portfolio performance while lowering costs and meeting ever-changing occupier demands. Meanwhile, investors and managers are leveraging new technology and asset-level strategies with big data and local market insights to drive increased valuations and returns.
As the world adapts to a new normal, private real estate is a sector struggling to adapt to changing tenant demand, as attracting hybrid working employees back to the office is no mean feat.
Modernizing and repurposing assets has become key to encouraging people back to workplaces. Where once location was key, now wellness amenities and spaces for social interaction triumph. Assets without such features in today’s market risk becoming stale, even if newly built.
One overarching message is clear: creating value in today’s market involves a lot of adapting. Whether that is offering multi-purpose space or updating an asset so it stands out in the modern marketplace, it is time to get creative to add value – and that will come at a cost.
With a laser focus on tenant requirements post-pandemic, private real estate professionals are investing with conviction in the megatrends shaping the future of life and work.
This includes significantly lowering a property’s carbon emissions to avoid ESG obsolescence, optimizing spaces and technology for tenant health and well-being, and strategically repositioning asset facilities to meet changing occupier demands. In short, the opportunities for value creation are immense.
The penny has dropped among real estate owners and asset managers that it is no longer enough to be a “provider of space.” The sector must provide a service. And this approach is now widely regarded as the vital cog in value creation wheel.
Tenants demand more from property these days – cutting-edge technology, better lighting and air-quality, social amenities and concierge-like services. They need to be courted; their needs to be met. It is accepted now that this reorientation toward a more service-based model ensures assets are resilient and fit for future purpose; key to reducing void periods, retaining tenants, attracting new ones, potentially commanding higher rents, and enhancing investor returns. As one expert reflects in this report, “You can create value through the quality of the relationship with the tenant and better understanding their drivers.”
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