It was all clear, really. Refurbish, let out, sell. That was the plan of the Munich-based property company W und Bauer when it took over a complex of vacant office buildings in Aschborn in 2018. The business model worked without a hitch for two of the three properties. But things turned out differently with the third building. The major tenant from the tourism sector, who had been firmly lined up, pulled out due to the pandemic. The planned resale fell through and the entire financial forecast was thrown into disarray.
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Unlock content Accept the required service and unlock contentHowever, rather than abandoning the project, the company opted for a radical change of strategy. The building, later known as Margentaler, was extensively refurbished and, instead of being sold, was added to the company’s own portfolio. W and Bauer thus exemplify a trend that has since come to characterise the entire market.
The slump in the transaction market
Since 2022, we have seen a massive slump in property transactions, particularly in the office sector. In the office property sector alone, transaction volumes have fallen by more than 50 per cent. At the same time , loans totalling around 4.5 trillion US dollars are due to mature worldwide between 2025 and 2028. This places enormous refinancing pressure on property owners.
There are many reasons for this development.
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Rising interest rates are making financing more difficult.
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Banks are acting more cautiously and are more restrictive in their lending.
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ESG requirements are shifting investor interest.
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Remote working and hybrid working models are leading to new usage requirements.
Those who used to make money through quick exits now face a dilemma. Selling means taking significant losses, whilst holding on requires new strategies.
The shift in strategy: from selling to holding
More and more market players are opting against short-term sales and in favour of active portfolio management. Major players such as Brookfield Properties and Tishman have publicly stated that they intend to focus more strongly on asset management and long-term cash flow.
The aim is no longer to produce a sales prospectus, but to present a robust asset management plan that combines three factors:
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Stable cash flow
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ESG compliance
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Long-term flexibility of use
What opportunities are there for property owners?
The greatest advantage lies in the time gained. Those who do not need to sell immediately can carry out targeted refurbishments, reposition the property and wait for more favourable market cycles. Given rising interest rates and ESG requirements, this time is a decisive competitive advantage.
1. Developing new usage concepts
Vacant spaces can be converted into co-working areas, lab offices, educational spaces or even residential accommodation. The key is to view the property no longer simply as an asset to be sold, but as a versatile product.
2. Scenarios rather than one-off solutions
Best practice shows that successful property owners explore various usage concepts. They assess the options of letting, mixed-use models and rezoning. Digital tools help to realistically project revenue, ESG metrics and long-term costs.
3. Professional asset management
Many stakeholders are setting up in-house asset management teams or working with specialist partners. These teams manage tenant structures, refurbishments, grant funding and ESG certification. The result is properties that are easier to let, better financed and more stable in the long term.
4. Agility in refurbishment
Companies that do not tackle everything at once, but take a step-by-step approach, are particularly successful. One floor is refurbished, initial experience is gained, and the project is then expanded. This ensures flexibility is maintained.
5. Making use of new financing options
As banks are reluctant to lend, private debt funds and mezzanine investors are increasingly stepping in. They provide targeted financing for regeneration projects and are better suited to longer holding periods.
The refinancing trap
One risk remains, however: many financing arrangements are originally structured with a view to a quick exit. Short terms, high loan-to-value ratios, and repayment in a single lump sum. If a sale fails to materialise, there is a risk of having to repay the loan without fresh capital.
The solution lies in actively restructuring debt. Property owners should speak to banks at an early stage and explore alternative models. Loan funds or specialist providers such as Haushirsch offer more flexible solutions tailored to property revitalisation and portfolio development.
Conclusion
The story of W and Bauer is no longer an isolated case. It is representative of an entire sector undergoing change. The days of quick sales are over for the time being. Those who wish to survive must focus on active portfolio management, flexible usage concepts and smart financing solutions.
Rather than hoping for quick profits, the focus must now be on safeguarding value, adapting and developing long-term strategies.
The market is challenging, but the opportunities are there. New demands, digital tools, alternative financing options and best practices provide the building blocks for a sustainable business model.
The message is clear: passive waiting is not an option. Taking active steps with foresight and a systematic approach is the key.
