Through much of the last cycle, a prolonged low-rate environment kept cap rates compressing and values moving upward, meaning asset management could almost be a secondary consideration behind owning the right property in the right location.

That era is over, and returns now have to be earned from within the building itself.

Operational efficiency has become a core discipline, with sharper cost control and leasing execution protecting and growing Net Operating Income (NOI) in a market where rental growth can no longer be assumed. Manage-to-green strategies are converting what was once a compliance cost into a genuine value driver, as green premiums and brown discounts become visible in transaction evidence. And repurposing is unlocking value where original uses no longer fit demand.

Together, these levers are making asset management the primary driver of returns in today’s market.

Managing in today’s market

The market backdrop makes the case for active management even clearer. Investor sentiment today is best described as cautious optimism.

According to Savills‘ European Investment Nowcast, investment volumes reached approximately €53bn in Q2 2026 (6% above the same period last year), with full-year volumes forecast to grow by around 16% year-on-year. But while overall activity is up, growth remains fragmented. Some major economies recorded Q2 2026 volume decreases – The UK and Germany for example – as capital remains selective amid ongoing economic uncertainty and higher interest rates.

Occupational markets tell a similar story of divergence. Rental growth is soft and vacancy is rising for non-prime stock, while high-quality, efficient buildings remain in demand and limited pipelines are creating rental growth opportunities in supply-constrained markets.

The gap between the two is telling: it is the efficient, well-run, sustainably positioned assets that continue to perform and attract what capital is out there, while the rest struggle. That divide is why manage-to-green strategies and operational efficiency are no longer optional refinements – they are what now separates outperformance from the rest.

Managing green

Manage-to-green strategies go well beyond compliance. The impact of transition risk on value is being driven by converging forces: occupiers increasingly won’t lease space that doesn’t meet sustainability standards and investors are underwriting to net-zero targets, meanwhile physical risks like flooding and storms are starting to weigh on long-term hold and exit planning. Red Book valuers have noted that EPCs, despite known imperfections, are already moving pricing on efficiency grounds alone.

The „green premium“ and „brown discount“ are no longer theoretical; they’re increasingly visible in transaction evidence.

At Savills IM, decarbonisation ambitions were incorporated into our investment approval processes some time ago, both for new acquisitions and for approving capex budgets on refurbishments of assets already under management.

At Stage 1 due diligence we screen physical climate risk and energy rating gaps, and for Stage 2 we run a CRREM analysis to understand stranding risk over the hold period. If needed, we then design a carbon strategy for the asset’s full management period, broken down into concrete actions within each annual business plan from quick wins like LED and sensor retrofits, to larger capex items like heat recovery upgrades.

Managing sector to sector

How asset management strategies are applied in practice, though, depends heavily on the sector. For example, what ‚good asset management‘ looks like in living is very different from what it looks like in logistics.

In living, asset management looks closer to running an operating business than a traditional landlord model. Performance depends on actively managing rental revenue streams and continuously optimising operating costs to protect NOI. Increasingly, that means owning or closely integrating with the operating company (OPCO), having in-house regulatory expertise, and using PropTech for larger scale tenant credit risk and engagement. It rewards managers who specialise by sub-sector (BTR, PBSA, build-to-sell, affordable) rather than applying a generalist playbook with regulatory and operational demands differing sharply even between sub-sectors.

In logistics, where we manage €7.1bn of AUM across Europe, good asset management increasingly comes down to specialisation and staying ahead of trends defining the sector – think sustainability, nearshoring and access to power.

Indeed, access to grid capacity is now a real factor in occupier location decisions and portfolio liquidity. We recently saw this first-hand on a potential acquisition in the Netherlands, where an outgoing tenant with light energy needs had let the building’s grid capacity lapse, and the incoming, more energy-intensive tenant needed more power than the congested local grid could supply – requiring the landlord to invest in solar PV and battery storage just to keep the asset lettable. It’s why we build grid-capacity protections into our leases, and why energy security sits alongside leasing structuring and technical capability as a core asset management skill in this sector.

Managing smarter

Technology is changing asset management on two fronts. The first is data: professional investment management today requires collecting and structuring vast volumes of property data (technical, operational and ESG) to support the right decisions. That’s why we built our own ‘SIM Data Warehouse’, fed by platforms like Cherre (operational and technical property data) and Deepki (ESG data), giving us a live, structured view that feeds directly into investor reporting and performance monitoring.

The second front is operational reality, particularly in residential: managing thousands of residents and their lease contracts isn’t feasible without proper technology support, and it’s what allows us to serve tenants and run day-to-day operations properly.

On top of both, our AM team is actively using AI to improve process efficiency and sharpen investment performance, automating parts of reporting and analysis and freeing up time for the judgment calls that move the needle on an asset’s business plan.

Managing on the ground

In practice, asset management takes different forms depending on what an asset needs – from careful refurbishment to reimagining a building’s use altogether.

In Stuttgart, we completed a three-year refurbishment programme in collaboration with in-situ tenants. The project delivered a redesigned lobby, an upgraded outdoor amenity space, and a range of efficiency measures – including PV panels, LED lighting, motion detectors and water-saving fittings. Despite the disruption of the Pandemic and the war in Ukraine, the programme was delivered on budget and achieved LEED Gold certification.

Value can also come from a more fundamental shift: repurposing an asset entirely, moving it to its highest and best use when the original use no longer fits demand.

In Lisbon, we are completing a change-of-use conversion of a listed historic palace, from office to hotel and branded residences. Located within a protected heritage and urban regeneration zone, the approach preserves the building’s historic façade while unlocking significant value from a use far better suited to the location.

In Madrid, we recently completed a comprehensive retrofit of one hotel and two office buildings into a 267-unit residential scheme – c. 239 build-to-rent (BTR) units and 28 build-to-sell (BTS) units, alongside co-working space, a gym, spa, pool and urban garden. Sold this year, the project captured a material value uplift by moving the asset to its higher-and-best use.

An active, hands-on management approach is what separates outperformance from the rest – perhaps more so now than ever. As the market continues to reward quality, long-term income streams, asset management will only become more central to how real value is created.