👋👋 Good morning real estate watchers! Today, we are going to talk about how commercial real estate fundraising is back, everyone! It's up 29%! And look, before you get too excited, you should know that Brookfield and Blackstone accounted for 16 percent of ALL the money raised. Sixteen percent! That's not a market recovery; that's two rich uncles showing up to a bake sale and buying every cupcake. 'Oh, wonderful, the elementary school PTA hit their fundraising goal!' Yeah, because Warren Buffett wrote a check for the bouncy castle.

But first, here’s what we’ve been paying attention to this week…

1️⃣ Buyer's Delight-o-Polis: Zillow’s 2026 report crowns Indianapolis as the top U.S. city for homebuyers, offering affordability, appreciation potential, and low competition. With more breathing room and fewer bidding wars, buyers in top metros like Atlanta, Charlotte, and Jacksonville may finally catch a break. (Zillow)

2️⃣ The Fed’s Coffee Break: The Federal Reserve held rates steady and signaled it’s in no rush to cut again, pointing to solid growth, stabilizing jobs, and cooling (but still high) inflation. For housing, that means a steadier, more predictable rate environment as the market inches toward long-awaited stability, rather than more policy whiplash. (Realtor.com)

3️⃣ Closing? Nah, We’re Ghosting: A record 16.3% of homebuyers walked away from deals in December 2025 (the highest rate since Redfin started tracking) with 40,000+ cancellations driven by rising inventory and buyer pickiness. In a market where sellers outnumber buyers 47%, buyers are holding the power, and they’re not afraid to bounce. (CNBC)

4️⃣ Rocket Docket Shock-It: Rocket Mortgage is facing a class-action lawsuit accusing it of steering buyers into pricier loans by prioritizing in-house referrals over cheaper options—allegedly inflating costs and limiting consumer choice. Rocket denies wrongdoing and vows to fight the claims, calling them a rerun of a previously dismissed case. (NMP)

5️⃣ Gen Z Buys... Kinda: Gen Z homeownership nudged up to 27.1% in 2025, but the increase was more drizzle than downpour, thanks to stubbornly high costs and economic anxiety. Millennials also made a modest gain, though both groups still lag far behind their parents' generational pace. (Redfin)

TOP STORY

In 2024, private real estate fundraising hit rock bottom. It was the worst year since the pandemic turned "social distancing" into an architectural requirement. Investors scattered like guests at a party when the cops show up. Commercial real estate was, to put it diplomatically, deeply unfashionable.

But then 2025 happened.

Investors returned with $222 billion in fresh capital, a 29% surge that marked the first year-over-year increase since 2021. For the first time in four years, commercial real estate wasn't just surviving, it was throwing its own party again.

Here's the catch, though: two names on the guest list brought most of the champagne.

Brookfield and Blackstone (aka the Batman and Robin of institutional real estate…or perhaps Godzilla and King Kong, depending on your perspective) accounted for a staggering 16% of all capital raised in 2025. For context, that same duo represented just 0.8% in 2024.

Read that again. These two firms went from rounding error to market anchor in twelve months.

Brookfield closed the year's largest fund at $16 billion. Blackstone grabbed silver with an $11 billion opportunistic vehicle and also snagged fourth place with an $8 billion debt fund. When the heavyweights show up, the scales tip accordingly.

But then there's the question investors should be asking: Is this a genuine market recovery, or two giants carrying the rest of the industry on their backs like a buddy helping a drunk friend to the car?

While the headline numbers sparkle, the composition of that capital tells a far more interesting story.

Data centers (those unsexy warehouses of blinking servers that power your Netflix binges and AI hallucinations) absolutely devoured investor appetite in 2025. The sector accounted for 37% of all capital raised, an astronomical leap from 2% in 2024.

That's not a trend. That's a tectonic shift.

Blue Owl raised a cool $7 billy for data center plays. Principal Financial Group pulled in $3.6 billy. The artificial intelligence boom has transformed these temperature-controlled boxes into the most coveted real estate asset class on the planet.

Meanwhile, yesterday's darlings are nursing their wounds. Multifamily,the golden child of pandemic-era investing, dropped from 49% of capital raised to 32%. Industrial slid from 26% to 16%. And the office? That beleaguered asset class limped from 6% to a mere 2%, the equivalent of being seated at the kids' table at Thanksgiving.

But then, in a twist nobody expected, retail staged a modest comeback. The sector that everyone left for dead climbed from 1% to 5% of capital raised. Student housing tripled its share from 1 percent to 3 percent. Turns out reports of physical retail's death were slightly exaggerated…Or at least, some investors are betting that way.

Here's where the story gets complicated for anyone hoping the good times are rolling again.

Yes, money is flowing. But it's flowing slowly.

The average time to close a fund stretched to 25 months for vehicles that wrapped in 2025, up from 23.7 months the prior year. Compare that to the caffeine-fueled pace of 2020 and 2021, when funds closed in roughly 15 months. Investors are committing, but they're doing so with the deliberation of someone reading the fine print on a timeshare contract.

But then, and this is where the optimists get ammunition, those patient investors are being rewarded. More than half of all funds that closed in 2025 met or exceeded their targets, a jump from just 39% in 2024. Eight of the top ten investment vehicles surpassed their goals.

Translation: The smart money is slower, pickier, and getting what it wants.

The 2026 pipeline tells its own story. Starwood's Distressed Opportunity Fund XIII is targeting $10 billion, the only vehicle aiming that high. The name alone signals where sophisticated investors see opportunity: picking through the wreckage of overleveraged assets and capital-starved properties.

Blue Owl and Strategic Value Partners are each targeting $6.5 billion, positioned to capitalize on whatever dislocation emerges.

Domestic investment dominated 2025, with $89.2 billion raised strictly for North American plays. Multi-region strategies attracted $69.9 billion, while Europe-focused vehicles pulled $40.6 billion.

The capital is overwhelmingly staying close to home.

Commercial real estate's comeback is real, but it comes with asterisks. The recovery is concentrated among the most prominent players. The hottest sector (data centers) barely existed as an institutional asset class two years ago. And while money is moving, it's moving at the pace of a Midwestern real estate closing, not a Manhattan flip.

For investors, the implications are clear: Follow the data centers, watch the distressed plays, and understand that the giants are setting the tempo. The window for opportunistic deals is open, but the biggest players are already standing in the doorway.

The party's back on. Just know that Brookfield and Blackstone are controlling the playlist.