‘A more discerning market’: What’s driving real estate’s fundraising upswing

(upbeat music) - Hey everyone, and welcome to the Perry Podcast on your host, McKenna Loveins. Today we're digging into one of the clearest ways to take the market's pulse, fundraising. This week, Harry released his annual fundraising report. And after several challenging years, the numbers are finally pointing in a more positive direction. Private real estate fundraising made a notable comeback in 2025, marking the first time annual totals have risen year on year since 2021. Capital raised jumped nearly 30% from 2024, which was famously known as a slow fundraising year. But while that headline figures sounds encouraging, the story underneath it is far more nuanced. From the outsized role of mega managers to the return of opportunistic strategies, shifting sector preferences and fundraising timelines stretching longer than ever. Later in the episode, we will hear from Ryan Cotton, BAME Capital's head of real estate, which just raised $3.4 billion on its third flagship fund. Perry actually just got the exclusive on that story and it's live now on PerryNews.com. Our senior reporter at Perry, Harrison Connery, spoke with Ryan Cotton on the fundraising environment. So we'll hear that a bit later. But now I'm joined by Perry Editor Evelyn Lee and America's Editor for Perry, Greg Dual, to unpack that report. Thanks so much for being here. - Hi, McKenna, it's great to be back. - Yeah, thanks for having me. - Yeah, thanks guys. Well, to kick us off, Evelyn, I read that fundraising was up 29% compared to 2024 in 2025. The first increase since 2021. Evelyn, how meaningful is this rebound and is this a true turning point for private real estate fundraising or do you think more of a catch up year from 2024? - I mean, it's definitely meaningful in the sense that fundraising volumes are moving in the direction that everyone wants them to be. I do think it's too soon to say if it's a true turning point. This is the first increase in four years as you noted. And I think we need to see more of a sustained uptick before we can make a call on if it's a turning point or if it's more of a blip. To your question, I do think there was some element of playing catch up. And you can see this in two key takeaways in the report. First, the average time in market last year was the longest ever at 25 months. And then second, the report showed a notable increase in the proportion of funds closed that met or beat their targets. So 52% of funds closed in 2025 achieved that goal of meeting or exceeding target compared to just 40% in 2024. And if you look at the top 10 largest funds, eight of them also exceeded their targets. So if you put those two findings together, you can draw the conclusion that many managers finally closed their funds last year after very long fundraising periods. And part of the reason why that fundraising time frame was so long is because they were clearly looking to reach that goal or exceed that goal if they could. And I think that's where those two findings come together. And so I think there was a bit of catch up because these funds have been in market much longer than maybe historically. And they still got to their goal in the end, but it's just taking a lot, much longer period time than before. We did a podcast back in Q1 when we had some of these numbers that first came out. And back then, it was really noting on blocks and in Brookfield and their fundraising environment. And on the report that just came out, the two firms alone accounted for 16% of total capital raised in 2025. So Evelyn, can you walk us through maybe how much of this rebound was really driven by mega managers and what that means for smaller and mid-sized GPs trying to raise capital right now? You could definitely see the impact of both of those firms on overall fundraising. And I'll just note that for the first time, we added a slide to the fundraising part looking at what we call the Blackstone and Brookfield effect in terms of the proportion of aggregate capital raised from both of these firms every year for the past six years, so from 2020 to 2025. So the proportion represented by the two firms range from 0.8% in 2024 to 19% in 2023. So if you look at 16% in context of that range, it's definitely on the high end. And in fact, it was the second largest proportion that what we call the big two made up during that six-year time frame. So you could definitely say that mega managers were a big driver of the rebound last year. And if you look beyond just a Blackstone and Brookfield, you had five mega funds, meaning funds that were $5 billion or greater in size that closed in 2025. Three of them did belong to Blackstone and Brookfield, but there were two others, one from Blue Al and one from Carlyle. And those mega funds together made up $54 billion or 24%. So roughly a quarter of the total capital raised last year. So I think that was definitely an outsized impact. I'll also just say, I think you referenced the Q1 podcast we did when we saw this big uptick in the fundraising figures largely driven by Blackstone and Brookfield. And I think we were right to point that out. If you break down how this total last year came together, this 222 billion, Q2 and Q3, following that strong Q1, actually then lagged behind 2023 and 24 in terms of aggregate capital raised, you could see a world where that trend continued into Q4. But on the contrary, Q4 was actually the strongest since 2022 in terms of aggregate fundraising. So there is an element of ending the year on a high note a little bit, whether that carries over into 2026, obviously anyone's guess. Yeah, I mean, it'll be interesting to kind of see those Q1 numbers for 2026 as well and what firms led the way on that. But to flip over to you, Greg, you know, another major driver that was highlighted on the report was the rise of data center focus funds while residential and industrial strategies saw a drop. Greg, can you talk a little bit about what's behind investors growing appetite for data centers? And do you kind of see this as a cyclical shift or maybe something more structural? Yeah, I mean, it feels right that data centers would command the lion's share of the sector specific fundraising based on everything that we've heard and observed from the market over the past year. I think it's important to zoom out a little bit for context. Yes, fundraising was up over 2024 and even over 2023. Still down pretty significantly from 2022 and 2021, particularly when over 300 million in aggregate capital was raised. So if you're a manager, you're still operating in a relatively slow environment against that backdrop. I think we saw capital gravitate toward this sector that is growing and generating a prospect of really strong returns. And we saw that in some of the largest fund closes. I mean, blue all raised $7 billion for data centers, principal raised at $3.6 billion fund. PIMCO as our colleague Charlotte DeSooza reported, raised the biggest European specific data center funded history, pulling in 1.8 billion euro. Something else though that I think we all observed last year was that 2025 was kind of the year when we start to see a little bit of doubt and anxiety creeping in about future demand for data centers. I mean, we all remember the deep seek revelation that rattled markets at the start of the year, increasing talk of an AI bubble and just kind of the idea that without access to power, a lot of these data centers that people are fundraising for might not actually get built. One fundraiser I thought was interesting last year was won be wrote about in October by BGO, they raised half a billion for a dedicated fund to develop last mile logistics, tacked on $260 million dollar co-investment by setting aside three of those sites for data centers. They have power, they don't have the tenant. That wouldn't be spoke to John Care, he made it seem very intentional that they've got this backup plan. In case the data centers don't work out, they can build last mile logistics. I thought it was pretty interesting to hear a manager talk about data centers that way and sort of acknowledge the need for downside protection. So we don't know how these numbers will shake out in 2026, but if there is a broad base recovery in fundraising, I wouldn't necessarily be surprised to see industrial or residential retake that top spot next year. - Yeah, and talking about strategies, opportunistic strategies reclaimed the larger share of capital raised in 2025 at 33%, which was up sharply from just 18% in 2024. Evelyn, what changed in the market to bring opportunistic back to the forefront? - I think it's again, the skewing of the largest funds in market, you know, if you look at the top 10 largest funds opportunistic account of first six of them, including the top three. In terms of why that was, I mean, there's two major reasons for this. One, when you think about again, the black stones and brick fields of the world, you know, their flagship real estate business is a higher risk, higher return. That's how they got their start in the asset class. And since their funds are typically among the largest to close in a given year, that is going to push up the share of opportunistic capital raised. Second, investor demand has been shifting toward higher return strategies. You're seeing everyone from CPP investments to MBIM and a whole host of US public pensions that are looking to real estate now as a return enhancer, rather than, let's say, a diversifier inflation hedge. And they're planning to invest more of their capital in non-core strategies, including opportunistic. So that is going to drive more capital into opportunistic funds. - Yeah. And, you know, I mean, something else that we saw too, which was interesting in the report was in 2024, debt strategies led fundraising, but in 2025, you know, we both saw debt and value add pull back a bit. Greg, can you talk about, you know, what factors you think may be contributed to that decline? - Yeah, I mean, look, investors are not a monolith, right? They have multitudes. As Evelyn rightly points out, a lot of the big investors sort of gravitating towards higher risk strategies. I think we saw some other investors really look at core, real estate more favorably, sort of a flight to safety. So I think that could be part of the story behind, maybe a little bit of a pullback on the value add side. I mean, I can sit here and say, it's a market reset, like now's the time to go after the high return strategies and capture that upside, but it's easy for me to say, I'm not responsible for billions of dollars and other people's retirement savings. So I also think there are reasons why maybe core real estate looks good, right? Now, there's been a huge slowdown in construction across basically every asset type, I guess outside data centers. Worth noting that the Odyssey index shows that core real estate returns turned positive toward the end of 2024 and over main. So I think there's something we said about higher quality assets, leading the broader value recovery there. I also think with debt strategies, I mean, undeniably they've had a moment the past few years, we've talked about it endlessly on this podcast, specifically amid higher rates, pullback of traditional lenders, creating a lot of opportunities in private real estate debt. But with the anticipation that rates are going to fall, I think you're seeing some investors feel like it's time to move back into equity again. We've heard some of the bigger managers like Hines say things like that, we had David Steinbeck on the CIO over there on the podcast last week, talking about how 2025 they saw opportunities in office debt. 2026, they see opportunities for office equity just start trading again. So could see some more managers and investors move in that direction in 2026. - That's a great point. And despite this rebound in capital raise, everything is sounding really optimistic, but fundraising timelines have also stretched to an all time high an average of 25 months in 2025, which was up from 15 months in 2020. Evelyn, which types of managers do you think were most affected by these extended timelines? And where there are certain managers that you saw who truly used the full 25 months to get funds over the line? - Yeah, the short answer is everyone or almost everyone. It's the most challenging fundraising environment and recent memory. While there are course have been exceptions, I would say most managers have been affected by this challenging environment, even the industry heavyweights. And you don't have to look any further than the top five funds. The only one of the top five that closed last year was able to reach a final close in under two years. And that was Carlisles, Carlisle Realty Partners 10. That fund was a market for roughly a year and a half. The only other fund of the top five that came in under 25 months was Breppe Europe 7 that had a 24 month time in market. And then the other three funds exceeded that one of them, even exceeded three year time frame. So yeah, even among the most successful fundraisers, they had a tough time raising capital. Again, like I said, some of it had to do with just trying to hit those targets. But aside from the fundraising environment being challenging for everyone, I think the ones that maybe struggle the most, you can assume that they faced additional challenges on top of that. And some of the typical ones you hear about why me fundraising outcomes didn't turn out the way they wanted, especially if they felt short of their target. Often it has to do with poor performance in prior funds. And more recently, that's included a lack of distributions from prior funds. So if they weren't getting capital back, investors couldn't invest a re-up in the next vintage in that series. If the managers are targeting an out of favor sector or market, I'm going to be a lot harder to raise capital. They could also have issues on the human capital front. So if there's turnover, we've seen that at a number of firms or sometimes a lack of clarity around succession, I think that would further add to the challenges that most everyone was facing in terms of the capital raising over the past year. - Yeah, and Greg, is this is something you also witnessed during your reporting in 2025? - Yeah, I think to Evelyn's point about the past performance and lack of distributions, I think something that we've heard from a few different managers that generally, when you're raising a fund, your re-up investors come in pretty quickly. And it's a lot of the time on the road is spent trying to bring in some new ones. So when you're not getting as many of those re-ups or maybe not getting them at the same size that they came into the previous vintage, it's naturally going to take longer to reach the target that you want to get to. - Bullen also, Greg, in your reporting this year, I'd love to hear from you a little bit about this. Regionally, North America, once again, led the way attracting 89 billion in capital. What do you think made North America really stand out in 2025? - What makes North America stand out? In 2025, I'd say instability, right? I don't know, I haven't heard any investors say the US looks like a safer place to invest your money than it did on December 31st, 2024. In fact, I think we've mostly heard the opposite both from North American investors and from European ones. But where are you gonna invest on some of? I mean, the US is the biggest commercial real estate market in the world, massive economy and growing population that needs things like housing and that hasn't changed. But interestingly, if you compare this to the 2024 full year fundraising totals, Europe actually gained on North America for regional specific fundraising. 2024, we had 65 and a half billion raised for North American specific funds and just about 20 billion for Europe. Last year, it was 89 billion for North America, but 41 billion for Europe. So more than doubled for Europe. So both regions saw an increase. Europe actually saw a bigger increase relatively speaking. I think that's borne out in a lot of what we've heard about the relative attraction of both regions given that everything that's gone on over the past year. Yeah, thanks for bringing that. That is really interesting and worth noting. And a region that has gained some momentum is this increased focus on Middle Eastern capital. Evelyn, how significant is this shift? And our managers changing their fundraising strategies are structures to better appeal to those regional investors. Yeah, so you did see a notable uptick in the amount of capital targeting the Middle East in the last two years. The region attracted $3.5 billion in 2024 and just under $3 billion last year. Most of these funds are being raised by domestic managers from the region. But I think what's notable is you are starting to see more overseas capital looking to raise Middle East focused funds as well. One of them was, you know, what we saw last year of that slightly under $3 billion. You had an SC capital looking to raise something focused on the GCC. It's a $500 million fund. And I think this is part of the evolution of the Middle East in the private real estate world. You know, it has really become a very prominent capital raising destination, you know, in the Middle Eastern sovereigns and other institutions have really been very steadfast in investing in real estate. You know, they were like, whereas other investors maybe took a step back during certain points over the past five years, certainly during the pandemic, they've really been continuously investing. And as a result, that led a lot of managers to come to the Middle East and now set up offices, you know, capital razors to really work closely with the Middle Eastern investors. Now, the next step in that evolution is the Middle East as an investment destination. If Middle Eastern investors are becoming an increasingly important source of fundraising capital, you know, those have been for funds targeting other parts of the globe. Now, what they want now is more of a reciprocal relationship where they're also seeing overseas capital coming into their home region. So rather than being a one-way street, you know, they want to see a two-way street in terms of capital flows. I think SC Capital is really one of the kind of early, early birds in terms of this hopping on this trend. We've heard quite a few other managers that are looking to do the same. So I would expect those numbers for, you know, targeting the Middle East to continue to tick up in the form of actual funds. I think those are in the works and I wouldn't be surprised to see more launches this year. - Yeah, all really interesting stuff. And, you know, we'll have to come back and check in when Q1 numbers drop and kind of see how those shape out. But, you know, thank you both for sharing your insights and helping us break down the key takeaways from the Perry's 2025 fundraising report. - Thanks, Vicetta. And I will just say, maybe to be a little self-serving here, but it's January 13th as we record this. And then we've had four big fundraising scoops on Perry already this year. So listeners, if you want to know about the fundraising totals before the quarterly report comes out, head to PerryNews.com. - Great, thanks, Greg. And on that note, I mentioned earlier that Harrison Connery, senior reporter at Perry, sat down with Ryan Cotton at Bing Capital. So let's hear a little bit about what Ryan had to say. - I'm wondering, maybe if you could start out by just giving us, you know, overview of what the fundraising process was like. We've heard from a lot of folks that, you know, it's been slow going. It's investors are pretty hard up. And just wondering if you have a similar view or if it was a little different for you guys. - Yeah, I'd say the data surely speaks to a difficult fundraising environment writ large. Funds have been in market on an increasingly elongated time frame. I think last year, 25 months in the market was average. Total amount of capital raised is down significantly, particularly exclude a couple of megafunds. You know, you're down more than 50% on a three-year cop of closed-ent fundraising in the United States. And so, absolutely, it is a difficult fundraising environment. It is a time in which investors are discerning. And you definitely need a position in the market and a set of capabilities that are seen as distinctive in the market. I think if you have those, if you're focused on the right things and if you have a good reason that you are capable at executing against those thematics in a differentiated way, there is absolutely capital there for those sorts of ideas. But I think the days of sort of generic allocations to the beta of the asset class, this sort of like, I just want exposure writ large, you figure it out. I think those days are definitely behind us and you're facing a much more discerning investor set who wants to be much smarter about where that capital will go thematically and from a sub-sector perspective and who really wants to understand, what is your access of competitive advantage? Why are you the right route to market for this strategy and how can you generate alpha and in a wide growth in what is likely to be a very alpha centric mark? - And so, we just put out our year-end fundraising report and you found that while capital raised last year was down overall, compared to historical norms, it was up slightly from 2024. And now the caveat there is that the mega firms of the world really contributed to a lot of that growth. So I'm just wondering, do you guys, based on your experience out there, fundraising, do you think the data seems to suggest there might be a recovery in 26? Things might be getting a little bit better. Is that what you guys saw it on the road or is there a different takeaway to be had here? - Yeah, I think we probably experienced two insights that are highly aligned with your data. One of those is a growing sense in the marketplace that we've arrived at a moment in the cycle that presents a good attachment point for new capital. You public real estate value squations at the 23rd percentile of long-term trading ranges. That's a good basis at which to be buying in to the asset class, particularly if you believe as we do, and as I think increasingly a lot of capital does, that you're kind of at a media of operating fundamentals. You've absorbed the development boom of 2021-2022. You're working your way through those operating challenges and you're going to migrate into a much more benign operating environment that allows you to grow in a live better and allows for better operating performance at the asset level. Well, then this is a really good time to start allocating capital. I don't think the average investor thinks this is going to be a fee-shaped cycle where it's a three-month window in time and you've got to go buy it all now or lose that window. And so I think people are dollar-cost averaging their way into the cycle. And I think they're coming back selectively and carefully, but I do think they are attracted by that relative value trade to equities to fixed income at this moment in time and that recognition that the basis is interesting. I think the second thing we're experiencing up that your data also validates though is that those investors while they are coming back are raising the bar on who has the capability to execute in that market environment. And so, you know, gone are the days of, let me allocate to a hundred managers and I've effectively bought the beta and I'll just write the recovery. And instead I think we've moved into a much more discerning market that's doing its diligence on what are your distinctive capabilities? How big is your team? How expert is your team? What platforms do you control that give you unfair competitive advantage in the ecosystems in which you compete? And I think as a consequence of that, you get the consolidation into larger managers who have differentiated capabilities who can attract differentiated talent who can build world-flash teams. And so neither of those, you know, insights from your data seem surprising to us. And in fact, I'd say seem very consistent with the experience we add on the road. (upbeat music) That's all we have time for today. Evelyn and Greg, thank you both so much for sharing your insights. And if you'd like to dig deeper into the numbers and analysis we discussed today, be sure to check out the full report on PerryNews.com. You can catch this episode in every Perry podcast at PerryNews.com/podcast or look for it on your favorite platform. And thank you as always to our listeners for tuning in. We'd love to hear what you thought about today's episode and previous episodes as well. So if you have a moment, please fill out our podcast survey. You'll find the link at the bottom of the page if you're streaming through PerryNews.com/podcast. Until next time, thanks for listening. (upbeat music)