D
WS Group, a global asset manager with over $1 trillion under management, has kept its focus on industrial real estate since 2018 and shows no intention of shifting that stance. Todd Henderson, the firm’s Head of Real Estate for the Americas, told Bisnow that office properties still demand the same capital and generate the lowest returns among asset classes, citing high volatility in cash flows.
Despite a surge in U.S. office demand—foreign investment jumped sixfold to $877 million in Q3, per CBRE—DWS’s Americas arm has been divesting office holdings. Today, less than 10 % of its portfolio is office. Recent sales include 505 Montgomery St. in San Francisco for $105 million and the two‑building Alhambra complex in Coral Gables, Florida, listed at $125 million.
Henderson notes that Class‑A office rents vary dramatically. In New York City, rents average $140 per square foot, whereas in Downtown Seattle, where vacancy hits 35.1 % and rents are $50.99 per square foot, the market is far weaker. Upgrading to Class‑A can cost hundreds of dollars per square foot, and only a few submarkets—such as Dallas’s Uptown‑Preston Center—show sustained growth. Other Dallas submarkets are deteriorating.
The firm plans to continue trimming office exposure next year, even for recent acquisitions near Dallas‑Fort Worth’s airport, which it intends to demolish and replace with industrial space. Industrial and multifamily remain the core of DWS’s strategy. In 2025, the firm acquired a 65,000‑square‑foot self‑storage facility in Taramac, Florida, and holds roughly 60 million square feet of industrial property.
Tariff announcements in early 2025 slowed industrial demand, but the final quarter saw a rebound driven by e‑commerce and big‑box retailers like Walmart and Chewy, as well as growing needs in medical and pharmaceutical sectors. Henderson predicts Q4 will be a strong period for industrial demand, with tariffs having only a modest effect on goods flow.
While 70 % of DWS’s assets remain industrial and multifamily, the firm slightly rebalanced toward multifamily early in the year. Q4 2024 and Q1 2025 saw “unprecedented” absorption in multifamily, and the outlook for the sector remains positive. Henderson argues that home values are stable, but high mortgage rates keep housing expensive relative to leasing.
Looking ahead, DWS is exploring new asset classes with attractive returns, such as retirement homes, and is considering increased development activity in 2026. He expects a surge in capital flowing into real estate that year, as interest rates reset and the market stabilizes.
