After a long run as the market's darling, private credit is losing its shine—and that decline could actually prove to be a surprising boost for commercial real estate. As investors retreat from a once red-hot asset class now facing mounting risks, capital may begin flowing back into real estate, where relative values are starting to look more appealing.
Private credit's troubles have been building for months. The bankruptcies of major auto-parts maker First Brands and subprime auto lender Tricolor Holdings last fall rattled investors and triggered warnings from top Wall Street leaders.
As JPMorgan CEO Jamie Dimon memorably put it during an October 2025 earnings call: "When you see one cockroach, there are probably more, and so everyone should be forewarned of this one."
Former Goldman Sachs CEO Lloyd Blankfein and Marathon Asset Management founder Bruce Richards have also cautioned that the boom in private credit has become increasingly risky.
Those warnings appear to be coming to pass. Blackstone's flagship Blackstone Private Credit Fund (BCRED) recently faced a surge of withdrawal requests—roughly 7.9% in gross redemptions, totaling about $3.7 billion. Such investor pullbacks suggest that confidence in the sector is waning.
The shift has all but flipped the narrative between private credit and commercial real estate. For several years, private credit outperformed real estate, but now CRE's fundamentals look better by comparison. Valuations in private real estate remain below their 2022 peaks, but that decline may create opportunities for sizable gains. A Hines analysis this month, using data from MSCI-Burgiss, NCREIF and Hines Research, projected cyclical upside potential of as much as 60% if valuations revert to historical norms.
Meanwhile, evidence of renewed investor interest is already emerging. CNBC reported that investments in non-traded, publicly registered REITs—which plunged from $33.2 billion in 2022 to $5.7 billion in 2025—are ticking back up. Those REITs raised $593 million in January, up from $467 million in December and $416 million in November, according to data from Stanger Investment Banking.
CNBC also noted that CoStar's data showed gains for non-traded REIT investments in the third and fourth quarters of 2025. Stanger Chairman and CEO Kevin Gannon told CNBC that he expects a significant share of money leaving private credit to find its way into real estate.
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