Blueprint

In family office circles, the conversation often centers around what to pass on. But in my experience, the more strategic question is how to pass it on, and to whom. Asset transfer is governed by legal structures and tax strategy. But the transition of responsibility requires something more thoughtful: preparation, participation, and trust.

As someone who is now part of a second-generation family office, I’ve seen firsthand how different families approach this, and how critical it is to get it right. When managed well, the handoff of responsibility doesn’t just preserve wealth. It preserves alignment. It builds legacy.

1. Begin Early, But Not All At Once

In one family I’ve worked with, a third-generation daughter was invited to shadow an uncle through a full underwriting cycle on a real estate acquisition. She wasn’t making decisions, but she was in the room. Over time, she developed the fluency and confidence to lead a small co-investment of her own, with mentorship baked into the process.

Involving the next generation doesn’t mean handing over a board seat at 25. It means inviting them into the process in a way that reflects their stage of life and their interests.

I’ve seen families introduce younger members by letting them sit in on investment meetings or shadow a due diligence process. Others develop learning tracks that include modeling deals, reviewing operating agreements, or understanding the capital stack.

The goal isn’t pressure. It’s proximity. The more familiar the next generation is with how the family operates, the more confident they’ll feel when their turn comes.

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If June was about consolidation in a recovering market, July has revealed early signs of stress that demand discernment, not hesitation. While capital markets remain active, issuance volumes continue to reflect a cautiously optimistic environment. Private-label CMBS issuance totaled approximately $59.6B in the first half of 2025, a 35% increase over the same period last year. CRE CLO issuance added another $17B through mid-year, bringing the combined total to roughly $76.6B. While clearly a rebound, these numbers remain below pre-2022 highs, signaling that investor interest in structured real estate credit is returning, but still tempered by macro uncertainty. For experienced operators, this is a moment that favors selectivity, strong fundamentals, and thoughtful structuring over chasing volume.

Delinquency data reinforces the need for vigilance. Overall CMBS delinquency rose to 7.23% in July, with multifamily showing the sharpest monthly increase. According to Trepp, multifamily delinquencies climbed to 6.15%, the highest among major property types. From Blue Lake’s view, this trend reflects concentrated distress among overleveraged sponsors and outdated underwriting, not systemic weakness in the asset class itself. In fact, certain metros are still performing exceptionally well, with occupancy and rent collections holding steady. Meanwhile, the office sector showed its first signs of stabilization after three consecutive months of increasing delinquencies. We interpret this as a pause in distress, not a full reversal, and remain focused on properties that are fundamentally aligned with demographic and employment shifts.

Labor market signals were mixed in July. The economy added only 73,000 jobs, a sharp slowdown from earlier in the year and well below expectations. The unemployment rate ticked up to 4.2%, and the number of long-term unemployed rose by 179,000. Despite these soft spots, wages remain supportive of multifamily demand. Average hourly earnings rose 0.3% month-over-month in July, maintaining a steady pace that continues to outpace rent inflation in most markets. For Blue Lake, this ongoing wage stability, even in a slower hiring environment, is a key indicator that the renter base remains economically healthy, particularly in the white collar class segments where our portfolio is concentrated.

On the ground, rent fundamentals are stable but slowing. The national average advertised rent declined slightly in July to approximately $1,717, according to Yardi Matrix. Annual rent growth decelerated to 1.1%, down from 1.5% at the start of the year. This reflects a natural reversion to historical norms after several years of outsized growth, and in our view, presents a healthy rebalancing rather than a red flag. Absorption has remained strong across many Sunbelt and secondary markets. Reports indicate over 227,000 units were absorbed in the second quarter alone. While national year-to-date absorption is not yet finalized, the trend points toward continued demand resilience, particularly in areas where job and population growth remain above average. At Blue Lake, we continue to see outsized performance in professionally managed, well-located communities where pricing is aligned with local income growth.

Investor sentiment is improving across the board. The Commercial Real Estate Finance Council’s sentiment index rose to 112.3 in Q2, up sharply from 87.9 in Q1, indicating a shift from caution to opportunity among institutional capital providers. For us, this validates what we are seeing firsthand. Well-capitalized, experienced sponsors with a clear strategy and operational edge are in a strong position to capture long-term upside in today’s environment. At Blue Lake, we are focused on assets where we can create value through improved operations, capital efficiency, and long-term alignment with our investor partners. As selective distress emerges and risk becomes more differentiated, we believe this cycle will reward those who stay disciplined and act decisively.

If you'd like to partner alongside us, simply reply to the email we sent you and I'll be happy to meet with your directly. 

As of early August 2025, the U.S. stock market continues to hover near record territory. The S&P 500 closed at approximately 6,205 index points on June 30 and reached 6,306 by July 21, reflecting strong year-to-date gains. Yet beneath the surface, investors face a tug-of-war between optimism over a soft landing and caution over mounting recession risks.

Major surveys signal anxiety. In April, 93% of investors expected the S&P 500 to remain at or below 6,000 over the next year. Many warned of stagflation or a decline. At the same time, economists such as Mark Zandi argue the economy may be “on the precipice of recession,” citing weakening job growth, slowing construction, and trade policy risks.

Strategists at SocGen forecast the S&P could rise to 6,900 by the end of 2026. However, they caution that 7,500 may represent bubble territory, reminiscent of the dot-com peak. Morgan Stanley suggests that even a mild recession could lead to an equity rally, assuming rate cuts and policy easing begin to materialize.

The overall tone is clear. Equity markets show resilience, but valuation risks and macro headwinds remain a concern for long-term capital preservation.

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- Flight to Quality Supports Absorption and Stability

The market-rate rental housing sector remains fundamentally healthy. Wage growth, though modest, continues to outpace rent increases in many markets, supporting improved affordability for renters. This dynamic has fueled what we view as a "flight to quality," with renters opting for newer, professionally managed units over older, less-amenitized alternatives. Demand has remained strong enough to absorb a record volume of new deliveries without causing material stress to occupancy or revenue. As rent growth moderates, the sector is building a stronger foundation that we believe will support durable expansion once the construction pipeline begins to taper.

- A Pricing Stalemate Between Confident Buyers and Sellers

In the investment market, we continue to see a standoff between buyers and sellers. Both sides remain bullish on the sector’s long-term potential, but this shared optimism is producing a pricing disconnect. Sellers are still trying to price in future rent growth, while buyers are underwriting to more conservative near-term assumptions, seeking to capture that upside for themselves. As a result, many sellers are holding firm on pricing and opting to retain quality assets rather than transact at a discount. We anticipate this stalemate will begin to break as new supply slows and rent trends recover, creating pressure for buyers to meet sellers closer to their mark.

- Concessions on the Rise Amid Rent Growth Pause

That said, rent growth has slowed more sharply than many expected heading into mid-2025. While tenant demand remains robust and affordability is improving, new supply is capturing a disproportionate share of lease activity. This has left many existing properties competing more aggressively, especially in lease-up heavy submarkets. Operators of older or non-renovated assets are increasingly turning to concessions to protect occupancy, which is weighing on revenue growth in the near term. Despite this softness, we see a favorable setup ahead. As deliveries decline, competitive pressures will ease, and stabilized assets with a clear value proposition will be well positioned to outperform.

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