Private Credit Exodus Drives Real Estate Interest

Private credit volatility could push investor capital back into commercial real estate as investors seek stable yield.

March 17, 2026

Private credit volatility is prompting renewed interest in commercial real estate (CRE) investments.
Non-traded REITs saw fundraising momentum pick up in early 2025 after prior outflows.
CRE values remain 22% below their 2022 peak but may attract investors due to a stabilizing market.
Yield-seeking capital is moving from private credit to real assets, with industrial and multifamily sectors favored.

Key Takeaways

Private Credit Exodus Sparks CRE Rotation

After years of record inflows, the private credit market is now experiencing outflows as investor risk appetite shifts, reports The WSJ. Recent market volatility, legal disputes, and concerns over risk exposure have put private credit in the spotlight. As a result, commercial real estate is emerging as a preferred alternative for yield-seeking investors. Non-traded REITs, in particular, are showing signs of renewed capital inflows, with fundraising rising steadily over the past several months.

Chart showing Western Alliance and Jefferies Financial stock performance falling roughly 30% since mid-February, significantly underperforming the KBW Nasdaq Bank Index, which declined around 13% over the same period.

Fundraising Returns for Non-Traded REITs

Non-traded REIT fundraising jumped to $593M in January 2025, up from $416M in November, signaling the start of a possible rotation out of private credit. Data from Stanger Investment Banking and CoStar confirms steady gains through late 2024. Recent industry data also shows private REIT fundraising significantly outpacing public REITs this year, underscoring how investors are increasingly favoring private real estate vehicles for income and stability. With private credit redemptions mounting, industry executives and analysts expect more capital to find its way into CRE vehicles.

CRE Values Show Signs of Recovery

According to Green Street’s Commercial Property Price Index, commercial real estate values declined 22% from April 2022 to December 2023. The market is now showing a slow U-shaped recovery, which some investors see as an attractive entry point. As global economic uncertainty persists, real assets like CRE offer diversification and stable yield opportunities.

Sector Focus and What’s Next

Blackstone and other major CRE players remain focused on data centers, industrial assets, and multifamily, where income and stability are more predictable. Some office deals persist, but conservative strategies dominate due to ongoing rate uncertainty. Industry leaders suggest the pace of rotation into CRE will depend on wider economic signals and interest rate trajectories, but the consensus is that real estate—and especially top-tier properties—will continue to benefit as capital seeks resilient yield outside private credit.