Blackstone raises $30.4 billion real-estate fund

The real-estate sector in general may be in the doldrums, but with its $30.4 (€29bn) Blackstone Real Estate Partners X vehicle, the New York firm has nevertheless convinced investors that there is still money to be made in certain segments.

Blackstone, which manages the world’s biggest portfolio of commercial property, will utilize the capital to invest in logistics, rental housing, hotels, labs, warehouses and data centers, as it shifts away from more traditional property such as office buildings and shopping malls.

“Sector selection has never been more critical as we witness the bifurcation of performance within real estate,” remarked Ken Caplan, Global Co-Head of Blackstone Real Estate.

Normally a staple of the construction industry, the office building sector has stagnated since the pandemic, and there is no immediate prospect of a return to the good old days, according to industry analysts. The US commercial building construction sector posted its third year of declining value in a row in 2022, at $230 billion, a 21% decrease from 2019’s pre-Covid high- water mark.

Covid led to the rise of remote work, an explosion of e-commerce and negative urban-population growth. San Francisco and New York saw their populations decline by -6.3% and -3.5% respectively between July 2020 and July 2021.   

Prior to the pandemic, San Francisco had a near 100% level of office occupancy, yet the office vacancy rate for the city sat at almost 30% during the first quarter of 2023, according to research by the real estate brokerage CBRE.

Shifting focus
Confronted with this reality, Blackstone Real Estate has shifted its portfolio away from assets facing headwinds such as office space and shopping centers, with approximately 80% of its investment activity now focused alternative real-estate assets.

Kathleen McCarthy, Global Co-Head of Blackstone Real Estate, remarked, “In every market cycle we have delivered for our customers by using our insights and advantages to concentrate their capital in investments poised to deliver strong returns. This record-setting fundraise reflects the trust we have built with our limited partners, and we are grateful for their continued confidence as we enter a compelling investment environment.”

Blackstone’s real estate business, which started in 1991, now has $326bn of investor capital under management.