Investors’ persistent inability to access their capital has boosted the popularity of the real estate secondaries market, helping these transactions move from a CRE niche play to a major source of cash for the industry.
The global secondaries market grew larger than previously thought in 2024 and is poised for more growth this year, according to a new report from CBRE — and now general partners are getting in the mix.
A secondary transaction is any in which equity is exchanged in the capital stack but the operator remains in place, according to CBRE.
The brokerage found that roughly $24.3B worth of global real estate secondaries transactions closed in 2024, an increase from the $23.4B CBRE counted in 2023. In the U.S. alone, that figure was $8.6B, about 93% of the total for North America, although no 2023 comparison for the U.S. was available.
“Over the last two years, we’ve been through the worst capital-raising markets for direct and primary real estate funds since 2012, 2010 to 2012,” said Kilian Toms, a managing director at CBRE Investment Management who leads the real estate partners strategy.
That has resulted in a fresh crop of entrants into the secondaries market.
“The types of groups that we’re speaking with today are very different than the types of groups that we were speaking with five years ago,” Toms said.
GP-led secondaries are the fastest-growing segment of the market. They made up 65% of these transactions in 2024, surpassing those that are limited partnership-led and what CBRE calls “controlled equity/debt transactions.”
LP-led transactions, when cash-strapped investors seek to exit their investments before they would otherwise be allowed to, used to be the more common form of these deals. Now general partners, the owners of real estate and sponsors of real estate funds, are the ones more often taking the reins.
These entities can tap into secondaries to provide liquidity for their investors, but they also use these transactions “to reset the business plan or reset their term of ownership to allow for more time to continue to manage assets and sell to their highest and best liquidity,” Toms said.
Since the pandemic, the market has weathered an onslaught of events including the impacts of remote and hybrid work, interest rate hikes, tariffs and unexpected geopolitical events. These have created conditions that make it challenging to sell assets at the right price point, keeping capital locked up.
Meanwhile, investors have sought to cash out tens of billions of dollars and some funds went over their own redemption caps just to keep investor confidence high. Some nontraded REITs, like those managed by Blackstone and Starwood, began restricting redemption fulfillment beginning in late 2022.
Earlier this month, Robert A. Stanger & Co. reported the backlog of requests had been nearly cleared, except for roughly $1B at Starwood Real Estate Income Trust, nearly three years after requests began piling up.
“You’ve had these different moments where sponsors have said, ‘This isn’t a good time to sell real estate’ to their LPs. Now they’re out of extensions,” Toms said. “They can’t really use that as a means to delay liquidity.”
This has been a boon for the secondaries market, which allows GPs to recapitalize portfolios and extend their business plans, creating a longer horizon for these investments.
Another possible reason for the growing number of GP-led transactions is that these transactions typically offer more transparency for potential investors, Toms said. Private market transactions are opaque by nature.
A June 2024 global survey of investment professionals by CFA Institute found that top concerns with private market transactions in general were around transparency of valuation reporting, fees and measures of performance.
But so far, transparency concerns don’t seem to be posing a major disadvantage to the secondaries market. 2025’s transaction volume numbers are poised to chart additional growth, Toms said.
The need for access to cash seems to be winning out for now.
The variety of groups engaging with Toms’ team continues to broaden, even just in the last five years. Now, it is more than just large allocators and global fund sponsors interested in exploring secondaries — specialist asset managers as well as operators and operating companies are getting in the game.
“That just signals to me that there’s this level of growth that’s really being driven by the granularity of how real estate is owned and who owns it,” Toms said. “Those groups are really looking into the secondary market to manage liquidity in their portfolio.”