After a slow start to the year, private equity firms are preparing for a major return to the commercial real estate market before year-end.
Capital waiting to move
Private equity firms are holding hundreds of billions in undeployed capital. Blackstone, for example, recently reported more than $170 billion in available investment capital, according to public filings. Much of this dry powder was raised during the uncertainty of 2022 and 2023 but has not yet been deployed due to shifting macroeconomic and policy conditions.
Momentum starts to build
The first quarter of 2025 included high-profile transactions by major players, suggesting growing appetite for deals. But momentum cooled in Q2 as concerns around interest rates and policy clarity resurfaced. Despite that, sentiment remains broadly positive heading into the second half of the year.
Deployment pressure rising
A significant portion of capital raised in the past few years is approaching the end of its investment window. With redemption requests increasing and fund managers under pressure to act, the market may see heightened competition for high-quality assets, even as return expectations tighten.
Investor focus is evolving
While industrial real estate remains a core target, investor attention is increasingly shifting to sectors with strong long-term fundamentals, such as student housing, healthcare real estate, and especially data centers. According to PwC, U.S. data center acquisitions surged more than 60% in 2024, driven by infrastructure demand and digital growth.
Bottom line
As capital deployment deadlines approach and confidence slowly returns, late 2025 could mark a turning point for commercial real estate investment. The capital is there, and the focus is shifting toward sectors viewed as more resilient and future-ready.
