Key Takeaways
- • Rising cost of capital is materially constraining dealflow in private real estate markets, driven by elevated global geopolitical risks and their localized economic consequences that are pushing financing costs higher.
- • Q1 2026 global dealmaking maintained 2025 momentum at $1.3 trillion, though capital stack restructuring is becoming more complex as investors navigate higher funding costs and elevated risk premiums.
- • Major US investment banks captured significant advisory revenue growth in Q1 2026, with Goldman Sachs leading at $1.5B (+89% YoY) and JPMorgan at $1.3B (+82% YoY), reflecting deal volume persistence despite market headwinds.
- • Market participants are actively reworking capital structures across deals to accommodate rising borrowing costs, indicating structural stress in traditional financing models during the current cost-of-capital environment.
Summary
The private real estate market is experiencing meaningful pressure as rising costs of capital collide with persistent geopolitical uncertainty, creating a challenging environment for deal execution and capital deployment. According to market participants referenced on The PERE Podcast, the combination of elevated global geopolitical issues and their regional economic fallout is driving up financing costs and forcing investors to fundamentally rework their capital stacks on existing and prospective transactions.
Despite these headwinds, dealmaking volumes have remained resilient. Global dealmaking reached $4.5 trillion in 2025 and maintained strong momentum into Q1 2026 with $1.3 trillion in transaction volume. This sustained activity is translating into strong advisory revenues for major Wall Street banks. Goldman Sachs led the advisory market in Q1 2026 with $1.5 billion in fees, representing an 89% year-over-year increase, followed closely by JPMorgan Chase at $1.3 billion (+82% YoY). Morgan Stanley generated $1.0 billion (+74% YoY), while Citigroup and Bank of America posted $0.5 billion each, with gains of 19% and 47% respectively.
The primary challenge emerging across the market is not deal volume but rather deal structure and execution. As capital costs rise, investors are being forced to reconfigure capital stacks—adjusting leverage ratios, equity contributions, and risk allocation—to maintain deal economics. This reworking process adds complexity and timeline risk to transactions. The strain on dealflow appears most acute in environments where traditional financing models assumed lower cost-of-capital assumptions, creating friction in portfolio companies and new acquisition pipelines across the private real estate sector.
Despite these headwinds, dealmaking volumes have remained resilient. Global dealmaking reached $4.5 trillion in 2025 and maintained strong momentum into Q1 2026 with $1.3 trillion in transaction volume. This sustained activity is translating into strong advisory revenues for major Wall Street banks. Goldman Sachs led the advisory market in Q1 2026 with $1.5 billion in fees, representing an 89% year-over-year increase, followed closely by JPMorgan Chase at $1.3 billion (+82% YoY). Morgan Stanley generated $1.0 billion (+74% YoY), while Citigroup and Bank of America posted $0.5 billion each, with gains of 19% and 47% respectively.
The primary challenge emerging across the market is not deal volume but rather deal structure and execution. As capital costs rise, investors are being forced to reconfigure capital stacks—adjusting leverage ratios, equity contributions, and risk allocation—to maintain deal economics. This reworking process adds complexity and timeline risk to transactions. The strain on dealflow appears most acute in environments where traditional financing models assumed lower cost-of-capital assumptions, creating friction in portfolio companies and new acquisition pipelines across the private real estate sector.
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