Corporate overview
AEW is one of the world’s largest real estate asset managers with $81.9/€79.1bn of assets under management as at 31 December 2024. AEW has over 860 employees, with its main offices located in Boston, London, Paris and Singapore and offers a wide range of real estate investment products including comingled funds, separate accounts and securities mandates across the full spectrum of investment strategies. AEW represents the real estate asset management platform of Natixis Investment Managers, one of the largest asset managers in the world.
AEW is one of the leading European real estate investment managers with €36.8bn of real estate assets under management in Europe as at 31 December 2024. With over 515 employees operating from 11 locations throughout Europe, AEW has a long track record of successfully implementing core, value-add and opportunistic investment strategies on behalf of its clients. In the last five years, AEW has invested and divested a total volume of c.€15bn of real estate across European markets.
For more information on AEW, visit www.aew.com
Sector forecasts
Industrial:
The European macroeconomic outlook has moderated somewhat for the second half of 2025 but retail sales are projected to grow over the next five years. Industrial output remains affected by the ongoing war in Ukraine and increasing geopolitical tensions around tariffs. The ongoing growth of e-commerce and near-shoring of supply chains are expected to revitalize logistics demand. Corporate revenue growth in sectors like third part logistics providers, retail, and e-commerce has warranted rent affordability for logistics occupiers. The logistics sector experienced a slowdown in 2023 and early 2024 from the previous pandemic highs, with vacancy rates stabilizing across Europe. Rental growth projections for the coming years remain well above expected inflation but have seen a marginal downward adjustment. 2024 deal volumes in the logistics sector improved by 16% compared to 2023 as interest rates stabilised and bid-ask spreads were bridged. Nonetheless, a revival in deal volumes and capital values is anticipated following these recent declines. European logistics transaction prices have stabilized, with manager sentiment showing the most rapid improvement in 2024 of any sector. This again underscores the sector’s preferred status among many European investors. Looking ahead, the outlook for total return growth in logistics markets has marginally weakened as some 2024 yield tightening has been included in current prices. Countries like Czech Republic, Poland, France and Portugal expected to yield the highest returns. The industrial sector remains robust, driven by ongoing trends in e-commerce and supply chain adjustments.
Office:
European office occupiers are continuing to find their new balance in hybrid working. Most new lettings are focused on high quality modern offices in central locations, prolonging the bifurcation between prime and secondary buildings. Office usage rates are starting the recover even as many companies are optimising their office footprints. Despite these changes, office-based employment growth and stabilized office space per employee are helping to balance demand and supply. With limited new developments and increased office conversions the supply and demand are more evenly matched. Vacancy rates peaked as of year-end 2024 and are projected to decline as new developments are less profitable than before and expected to further slowdown. The difference in vacancy rates between central business districts (CBDs) and non-CBD locations remains with occupiers favouring central locations to encourage employees back to the office, driving demand and rental growth in prime sub-markets. Meanwhile, headline rents in non-CBD areas have remained stable, with increased incentives for tenants. Even if the sentiment of managers has improved markedly for offices in the last few quarters, most investors remain cautious. Prime office values are expected to recover faster than secondary offices, offering attractive opportunities for new investments, with prime offices forecasted to deliver the strongest returns among prime sectors.
Residential:
Prime European residential markets show strong occupancy and stabilizing investment yields, despite the interest rate hikes and reduced lending of 2022-24. The longstanding and ongoing housing shortage has worsened as higher mortgage rates have made home ownership less affordable, boosting demand for rental housing. Positive household formation trends, especially in urban areas, counterbalance weak overall population growth. Limited new housing supply, due to low developer profitability and regulatory uncertainties, further constrains new supply into the market. Consequently, rental growth in prime residential markets is expected to outpace inflation over the next five years. Investment volumes in 2024 have already recovered by over 12% compared to 2023. Volumes are projected to further recover as both inflation and bond yields are expected to come in and as a result buyer and seller price expectations should realign. The residential sector faces modest refinancing challenges compared to the retail and office sectors. Since 2008, residential investment has doubled its share of total investment volumes, confirming its position as a core investment sector. Prime residential yields are expected to compress from H2 2024, potentially tightening by 30bps by 2029, partially reversing 2022-23 yield widening. Despite the challenge of elevated interest rates, the residential investment market remains robust, driven by strong investor demand and stable cash flows.
Retail:
European retail is experiencing an unexpected renaissance with 2024 footfall and tenant sales at high street and shopping center locations exceeded pre-pandemic levels as in-store sales volumes have recovered significantly. Despite ongoing uncertainty, real retail sales in the Eurozone are projected to grow modestly at 1.7% p.a., outpacing both 1.4% p.a. real GDP and 1.0% p.a. real disposable income growth over the 2025-29 period. This means that our retail sales projections implicitly assume that households prioritise retail spending over big expenditures like homes or cars, use their savings or take on new debt. Prime retail vacancy rates have stabilized at 3% in Q3 2024. After double digit declines in 2019-22, European prime rents for both shopping centres and high street retail are expected to return to modest 1.3% p.a. annual growth in 2025-29. Manager sentiment towards retail experienced the largest quarterly improvement in Q4 2024 of any sector, following a prolonged slump in the 2015-21 period. 2024 retail investment volumes increased by 11% from 2023 primarily driven by shopping centre transactions. Our Sep-2024 forecast shows prime European shopping centre and high street yields are expected to tighten by 40 and 30 basis points by 2029, respectively. Shopping centre returns are projected to surpass those of high street retail in most European countries. Finally, retail is projected to offer a higher current income yield compared to non-retail sectors. More investors might be interested in the relative safety of European retails’ high current income returns if bond (and related property) yield tightening is coming in less than expected.
Investment principles & strategy
Since its creation in 1981, AEW has been dedicated to creating and implementing real estate investment and asset management strategies for institutional and retail investors. AEW offers investors a wide range of investment solutions across Europe, including separate accounts and co-mingled funds across core to opportunistic strategies.
Strategic corporate development
Over the next three to five years, AEW is expecting to grow the European business by launching new strategies and continuing to invest on behalf of new and existing funds and separate account mandates. In particular, the firm is expecting to raise further capital for the following current strategies*:
- EUROCORE: an open-ended, pan-European core fund targeting a diversified portfolio of institutional quality assets in major European markets. The fund is targeting a €2bn equity commitment over time;
- UK Core Plus Property Fund: an open-ended core plus fund investing in a diversified portfolio of assets across the UK;
- LOGISTIS: a pan-European logistics fund comprising a standing portfolio of >€4.8bn in Grade A assets
- Data Centres: working with a specialised operator to build a scalable, flexible and modular colocation platform focused on supercomputing and AI
- Value Add Series: new funds in both the UK and Europe focused on urban repositioning, office refurbishment, industrial & living.
In addition to the above funds the firm is expecting to launch a number of programmatic ventures investing in value strategies in the logistics, living and alternative investment sectors.
* Retail and non-sophisticated investors are not eligible to invest in these funds.
Performance verification
AEW measures its performance against a number of benchmarks specific to investment strategy and style. The results of each portfolio are periodically audited by independent third parties and audited financial statements provided to clients.
Compliance statement
AEW includes (i) AEW Capital Management, L.P. and its subsidiaries and (ii) affiliated company AEW Europe and its subsidiaries. AEW Europe SA and AEW Capital Management, L.P. are commonly owned by Natixis Investment Managers and operate independently from each other. Total AEW AUM of $81.9 billion includes $37.2 billion in assets managed by AEW Europe and its affiliates, $4.8 billion in regulatory assets under management of AEW Capital Management, L.P., and $39.9 billion in assets for which AEW Capital Management, L.P. and its affiliates provide (i) investment management services to a fund or other vehicle that is not primarily investing in securities (e.g., real estate), (ii) non-discretionary investment advisory services (e.g., model portfolios) or (iii) fund management services that do not include providing investment advice. Staff and offices include AEW Capital Management, L.P. and AEW Europe and their respective subsidiaries.
