A version of this article first appeared in the CNBC Property Play newsletter with Diana Orrick. Property Play covers new and evolving opportunities for real estate investors, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large publicly traded companies. Sign up to receive future editions directly to your inbox. Just four years after soaring interest rates drove investors out of commercial real estate funds, some are pulling back from the once-hot private credit market. Investments in non-traded, publicly registered REITs increased from $33.2 billion in 2022 to $5.7 billion in 2025, but the increase in recent months signals a turnaround. These REITs raised $593 million from investors in January, up from $467 million in December and $416 million in November, according to tracking by Stanger Investment Banking. Additional data from CoStar shows that investments in non-traded REITs increased compared to the third and fourth quarters of last year. Some predict that as more money comes out of private credit, it will eventually flow into real estate. “We believe it will happen,” said Kevin Gannon, Stanger Chairman and CEO. “We’re starting to see signs that financing on the real estate side is starting to pick up. It’s slow, but it’s starting to pick up. And redemptions on the real estate side are subduing, and what’s happening now is a cycle of capital.” Recently, CNBC’s “Squawk on the Asked on “Street” whether investment advisors might be pulling their clients out of Blackstone Private Credit (BCRED) and into Blackstone Real Estate Income Trust (BREIT), the firm’s president and chief operating officer, Jonathan Gray, said, “I don’t know if it’s happening dollar-for-dollar, but if they have any concerns, they might pause.”Interestingly, I’ll tell you here in the first quarter.” BREIT inflows were the highest since 2022.” According to the GreenStreet Commercial Real Estate Price Index, commercial real estate values fell 22% from their peak in April 2022 to their trough in December 2023. We are still seeing a rather slow U-shaped recovery and the entry point remains very attractive for investors. As stock market volatility increases due to global economic pressures from tariffs and the current Iran war, hard assets such as real estate offer an attractive way to diversify your portfolio. In terms of sectors that could benefit, Blackstone has some specific office deals in place, but remains focused on data centers, industrial and multifamily, prioritizing stability and income in those sectors, said a person familiar with Blackstone’s internal operations who was not authorized to speak publicly about the matter. “At the end of the day, it’s all about yield, and if investors continue to raise money from private credit funds, it’s hard to replace that yield with other fixed income investments,” said Willie Walker, CEO of Walker & Dunlop. “Blackstone’s February saw BREIT inflows turn positive for the first time in four years. Outflows from private credit could have a significant impact on CRE funds, as private credit funds are much smaller than billions versus trillions of dollars of CRE debt funds.” And as headlines about redemptions from private credit spread, the conversation seems to be heating up quickly. “Yesterday, I was in a meeting here in New York with some very large investors, and we were discussing exactly that topic,” Christian Ulbrich, president and CEO of JLL, said during a March 12 taping of the CNBC Property Play Podcast scheduled to be released next week. “In the uncertain environment we’re in right now, real assets are perceived as incredibly attractive and their private credit conditions are literally pulling people into real assets. So potentially real estate and real assets could be the beneficiary,” Ulbrich said, adding he cautioned that investors will still take the most conservative path in the newly volatile interest rate environment. This means the best buildings in the best locations, including not only high-quality office buildings, but also logistics facilities, warehouses, apartment complexes, and more. Interest rates remained a wild card, as they were expected to continue to fall significantly. Concerns about energy prices and inflation have dampened expectations for the U.S. Federal Reserve to cut interest rates. This can cause turnover into real estate to be slower than it would otherwise be. “We’ve lived through this extraordinary situation,” Gannon said. “This situation has been going on for much longer than we thought, and it’s probably going to be a little longer now because of the war. But we think that eventually the money will find a home, and if we can show stability in property prices we will consider investing that money in real estate.”
