Family offices have become much more aggressive in the competition for real estate deals on behalf of their wealthy clients, in part because attractively priced assets are hard to find and in part because the number of beneficiaries has increased.

In interviews, these private-wealth managers and lawyers who serve high-net-worth families, with investable assets ranging from $50 million to $30 billion, described a new vigilance and conscientiousness in their client base. There are as many different family office real estate strategies as there are family offices, but on balance they have become more proactive and more aggressive, and their strong cash positions allow them to capitalize on the disruption in real estate that has followed the rise of online retail sales, the trend toward renting and other secular changes.

Jonathan Adelsberg, partner at the law firm Herrick Feinstein, said many high-net-worth families, some now in their third generation, have to accommodate an exponentially growing list of beneficiaries, all the while negotiating a real estate market with rapidly changing space demands. For example, the upheaval in the retail arena took some families by surprise, he said, citing declines in shopping center values of 30% or more.

"Traditionally, you'd have people who just manage the real estate, so you have a portfolio of income-producing property. You would re-lease it, you would refinance it, you would refurbish it, and that's the extent of what you would do. That's great ... but the world has changed," Adelsberg said.

David Friedman, founder of Ella Valley Capital, described a new vigilance and adventurousness in the generation now in middle age. They are more willing to take on debt in projects to keep properties clean and operations modernized.

"I think the younger generations are starting to become a little bit more institutional in their approach," he said.

Friedman, whose business focuses mostly on multifamily and office properties, noted that high-net-worth families, because they typically plan to hold assets for generations, are willing to pay steeper prices for desired properties. A tighter cap rate is not a deterrent in a prospective deal.

"That long-term view allows them to do things that maybe other investors can't," he said.

Client appetite for risk varies widely. Jeff Sica of Circle Squared Alternative Investments, which works with small to medium-sized portfolios with $50 million to $500 million of investable assets, said his client base is more interested now than ever before in new development — typically a higher-risk, higher-reward enterprise. They are eager to move money from stocks into "something real" and, encouraged by the increased popularity of renting over home ownership, multifamily developments have become especially popular.

?"Their main difficulty has been access to quality deals," Sica said. "The family offices have to compete with the institutions and the pension funds, so they're not finding as many opportunities. The way they're finding them is through good development opportunities."

However, Jonathan Epstein, managing director at GreenOak Real Estate Advisors, said his clients — with $1 billion to $30 billion of investable assets — have pivoted toward longer-term, cash-flowing deals with relatively little prospective downside. They will forgo a potentially lucrative new development for an attractively priced, stabilized asset, even if the return prospects are more moderate.

"Their bucket for lower-risk investments has increased, and the bucket for higher-risk investments has decreased, as the recovery is now in its eighth year," Epstein said.

Epstein noted that the ultra-high-net-worth set, with investable assets of $10 billion or more, are focused primarily on coastal gateway cities, where they perceive more stability. "I think they feel like the recovery has run its course and they should be looking at lower-risk, longer-term, cash flow-related deals," he said.

Herrick Feinstein's Adelsberg, for his part, said his clients are pursuing more development deals, as well as preferred equity and mezzanine positions. The goal, in whatever they do, is about long-term growth, rather than immediate gains.

"To a great extent, family offices have the opportunity, because they tend to have a lot of cash," he said. "In my mind, there's going to be a tremendous amount of opportunities for high-net-worth individuals to capitalize on real estate changes and shifts in the market."