After a sluggish start to the year, private equity firms are gearing up to deploy billions into the commercial real estate (CRE) market before 2025 wraps up.

Record Capital Waiting in the Wings

An estimated $350 billion in dry powder is sitting on the sidelines — much of it raised during the uncertainty of 2022 and 2023. Major players like Blackstone, Apollo, and Brookfield control a significant portion of this capital. Blackstone alone is sitting on roughly $177 billion globally. With economic and policy headwinds delaying investment, this capital is under increasing pressure to find a home.

Early Signs of Market Activity

While Q1 brought flashes of optimism — with Blackstone’s $4 billion purchase of Retail Opportunity Investments and Apollo’s $1.5 billion stake in Bridge Investment Group — momentum cooled in Q2 as anxiety over tariffs and interest rate policy resurfaced. Still, sentiment across the private equity space remains optimistic, with most firms anticipating stronger deal flow as the year progresses.

The Clock is Ticking

Many funds raised over the past 3–5 years are now up against the clock. Roughly $63 billion is tied up in vehicles approaching their deployment deadlines. Rising redemption requests from investors are adding to the pressure, forcing managers to either place capital or risk withdrawals. As more capital chases a limited pool of quality opportunities, competition is expected to drive down projected returns.

A Shift in Investment Focus

While industrial real estate remains a favorite, private equity firms are increasingly targeting alternative asset classes. Data centers, student housing, and healthcare facilities are drawing investor attention thanks to resilient demand and attractive fundamentals. Data centers, in particular, are booming — PwC reported a 60% surge in U.S. acquisition activity in 2024 alone.

➝ The Bottom Line

With a mountain of capital to deploy, narrowing windows for investment, and a shifting sector focus, late 2025 is shaping up to be a high-stakes reentry for private equity into CRE markets. The smart money is leaning toward alternatives and betting that market clarity — and rate relief — will soon return.