A change is in the air for commercial real estate, and as Blackstone Chief Operating Officer Jonathan Gray put it in a July investors call, “It’s a question of when, not if, because the building blocks of the recovery are clearly coming into place.”
So is the money.
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Equity raises for private funds are up 16 percent so far this year versus last year, according to Avison & Young. The $20 billion raised for North American private debt funds is the strongest ever, except for 2021, per Cushman & Wakefield research, and with $86 billion raised through August at a relatively torrid pace, 2025 is on track to exceed 2019, the height of pre-pandemic fundraising.
“Institutions are beginning to put their foot back into the water, but it’s private capital flowing into real estate fund-
raising,” said Marion Jones, principal and executive managing director of U.S. capital markets for Avison Young. “Private capital always pioneers recovery.”
This may be a moment when investors start taking advantage of what Cushman & Wakefield calls a “generational reset in property sales pricing” due to the pandemic and to other secular trends such as the e-commerce boom and the rise of generative artificial intelligence. A pivot took place after the CRE debt market reached an inflection point in mid-2024, property values began leveling off, and it became clear the Federal Reserve was going to stop raising key borrowing rates. Transaction volume was up 25 percent in the first half of this year versus 2024, said Jones, and new loan origination volume in the first half of 2025 has jumped 30 percent year-over-year, per Cushman & Wakefield.
It’s worth looking at who is raising and where and what they’re targeting. The big players have amassed significant war chests: Brookfield Strategic Real Estate Partners V, at $16 billion, and Carlyle Realty Partners X, at $9 billion, represent the largest real estate funds these bellwether firms have ever raised. Blackstone alone raised $20 billion this year across two funds.
“This is a compelling moment to invest, as we see improving fundamentals across our target sectors coupled with an environment of relatively constrained liquidity,” Rob Stuckey, head of Carlyle’s U.S. real estate, said in a statement.
Such moves are partially a signal of the wider interest in alternative private investment options today, said Robby Tandjung, intelligence platform Altus Group’s executive vice president of valuation advisory. The Stanger Market Pulse, a measure of such activity, puts the potential 2025 total for all alternative investment vehicles, including real estate options like Opportunity Zone funds and private REITs, at $200 billion, which would be a record. This private capital frenzy has been significant, said Tandjung, because foreign investors remained slightly spooked by the Section 899 so-called “revenge tax” proposed for — but not included — in the One Big Beautiful Bill that passed earlier this year.
It’s also a sign of significant consolidation amid fundraising, said Adrian Ponsen, a senior economist and researcher at Cushman & Wakefield. So far, 51 percent of fund closings this year by dollar volume were achieved by the top 10 funds, the highest-ever rate of consolidation. Ponsen attributes this to a desire for security and sure bets, a common sentiment in the run-up to recoveries.
But it’s also impacting the kind of deals being pursued. So far this year, Ponsen has found that these big funds have focused their investing on $100 million-plus transactions, seeking marquee sites as opposed to portfolio investments. There’s a focus on high-value, high-ticket, single-asset transactions with little occupancy risk, such as top regional malls or Class A apartments in significantly supply-constrained markets. Take Stockbridge, which has made a number of distribution center purchases in major delivery hubs California and Georgia.
There’s also a sense new opportunities have opened across sectors.
According to a Cushman & Wakefield analysis, amid the 20 largest, non-secondary real estate funds that closed this year, just four are exclusively focused on data centers, with 13 focused at least in part on either multifamily or industrial assets, or both. While the first half of this year saw 35 percent of all real estate funds devoted to industrial darling data centers versus 34 percent devoted to multifamily, that amount of diversity amid the AI hype bubble remains heartening. It’s even in a turnaround if you subtract those substantial data center fundraisings and investments, said Ponsen.
In addition, institutional funders are slowly starting to mobilize, and see value in investing in “the core food groups” again, as Avison Young’s Jones puts it. Private equity tracker PERE reported that at a Sept. 3 event for CalSTERS, the mammoth California pension fund, a consultant urged the fund to start investing in industrial, multifamily and other property “when CalSTERs has dry powder to invest in it.”
Other factors have driven the funding rush. Investors see that the speculative development cycle that started at the outset of the pandemic has died off, meaning supply-demand dynamics will be more favorable for property owners in coming years, said Ponsen. Blackstone CEO Stephen Schwarzman said as much during a second-quarter earnings call, noting that in real estate, “we are now seeing promising signs, with new supply falling sharply, the cost of debt capital coming down, and transaction activity picking up.”
It also helps, added Ponsen, that other investment opportunities aren’t looking great. Corporate bond spreads are at their tightest levels in more than 25 years, while the stock market’s price-to-earnings ratios are near an all time-high, suggesting the indexes may be overpriced. In the search for yield within alternative asset classes, more funding will continue rotating into commercial real estate.
Signs also point to the fundraising momentum continuing. Institutional funds still have significant redemption queues — waiting lists of investors in open-ended funds seeking to cash out — though the rate has dropped and continues to fall, from 24 percent last year to about 13 percent now. That’s close to what Jones considers a healthy 5 to 7 percent range, which she thinks the market will hit soon. A decline in these queues is a big indicator of confidence in the market, and of less constraint on institutional actors.
Jones also said she’s hearing limited partners have started to get distributions — in some cases, their first in years. And, finally, the uncertainty that market participants once expected from sudden federal policy shifts, including steeper tariffs, hasn’t manifested anywhere close to worst-case fears.
Instead, the market has adjusted, or at least become more accustomed to the whims of Washington, D.C. Avison Young research recently found that 18 REITs re-released their yearly forecast to account for new insights into tariff and other policy shifts, and all unanimously upgraded their estimates.
That kind of environment will lead to more transactions, Jones predicted, including a pickup in office deals in 2026, and a flywheel that will free up more capital for fundraising and further deals.
“There are a lot of institutional investors that still have billions of dollars of legacy assets that they fully intend to dispose of,” Jones said. “Those decisions have been made about the intention to sell. What they’re still figuring out is the right timing.”