Key Takeaways
- • Real estate secondary market reached record transaction volume in 2024 with 163 transactions totaling $14.6 billion in net asset value, surpassing the previous 2022 record of 161 transactions and $12.4 billion NAV.
- • Major institutional capital has accelerated entry into secondaries, with Goldman Sachs raising $3.4 billion for its real estate secondary fund in June 2024 (the largest of its kind), alongside $3.3 billion closed by Ares in December 2023 and $2.6 billion by Blackstone in November 2023.
- • Neuberger Berman closed its NB Real Estate Secondary Opportunities Fund II in February with over $1 billion raised, exceeding its $800 million target by 48 percent and demonstrating robust institutional appetite for secondaries vehicles.
- • Market expansion is driven by three primary factors: persistent liquidity constraints in commercial real estate, entry of new institutional players into the secondaries space, and the evolution of the market itself creating additional investment opportunities.
- • Secondaries activity has accelerated since the pandemic as commercial property valuations have contracted and traditional property sales have slowed, prompting fund investors to liquidate positions before full partnership exits rather than hold distressed assets.
Summary
The real estate secondary market—the market for buying and selling stakes in existing real estate funds—is experiencing record activity in 2024, driven by significant institutional capital inflows and structural dislocations in commercial real estate. Last year's transaction volume of 163 deals representing $14.6 billion in net asset value exceeded the previous peak set in 2022, when 161 transactions totaled $12.4 billion in NAV, according to Ares Management data cited in the Bisnow report.
The surge reflects a fundamental shift in market dynamics. Since the pandemic, commercial property valuations have faced sustained pressure, and the traditional property sales market has moved slowly, leaving many fund investors with capital needs. Rather than remaining locked into deteriorating assets until full partnership liquidations, these investors are increasingly seeking to monetize their stakes through secondary market transactions. Carey Flaherty, Chief Investment Officer at Madison International Realty, characterized the current environment as a peak moment for secondaries relevance. "Secondary market volume and commercial real estate transactions is at a peak level," Flaherty told Bisnow, noting that such inflection points are periodic rather than permanent, and the market is currently in one of the most favorable windows for secondaries activity.
Large institutional managers have aggressively established or expanded secondaries capabilities. Goldman Sachs raised $3.4 billion for its real estate secondary fund in June 2024, marking the largest dedicated fund of its kind. Ares Management closed a $3.3 billion fund in December 2023, while Blackstone's real estate secondaries vehicle reached $2.6 billion in November 2023. In February, Neuberger Berman closed its NB Real Estate Secondary Opportunities Fund II with over $1 billion in capital, surpassing its $800 million target and exceeding its predecessor fund by 48 percent.
Market participants attribute the expansion to three structural factors. First, the ongoing liquidity constraints in commercial real estate are creating persistent seller demand. Second, an influx of new institutional players entering the secondaries space is increasing competitive buying pressure and capital availability. Third, the market itself has matured, with greater transparency, standardization, and opportunity set breadth than in earlier cycles. Madison International Realty, which has invested in secondaries for two decades, represents the traditional long-term players now operating alongside newer entrants in an increasingly crowded but dynamic market environment.
The surge reflects a fundamental shift in market dynamics. Since the pandemic, commercial property valuations have faced sustained pressure, and the traditional property sales market has moved slowly, leaving many fund investors with capital needs. Rather than remaining locked into deteriorating assets until full partnership liquidations, these investors are increasingly seeking to monetize their stakes through secondary market transactions. Carey Flaherty, Chief Investment Officer at Madison International Realty, characterized the current environment as a peak moment for secondaries relevance. "Secondary market volume and commercial real estate transactions is at a peak level," Flaherty told Bisnow, noting that such inflection points are periodic rather than permanent, and the market is currently in one of the most favorable windows for secondaries activity.
Large institutional managers have aggressively established or expanded secondaries capabilities. Goldman Sachs raised $3.4 billion for its real estate secondary fund in June 2024, marking the largest dedicated fund of its kind. Ares Management closed a $3.3 billion fund in December 2023, while Blackstone's real estate secondaries vehicle reached $2.6 billion in November 2023. In February, Neuberger Berman closed its NB Real Estate Secondary Opportunities Fund II with over $1 billion in capital, surpassing its $800 million target and exceeding its predecessor fund by 48 percent.
Market participants attribute the expansion to three structural factors. First, the ongoing liquidity constraints in commercial real estate are creating persistent seller demand. Second, an influx of new institutional players entering the secondaries space is increasing competitive buying pressure and capital availability. Third, the market itself has matured, with greater transparency, standardization, and opportunity set breadth than in earlier cycles. Madison International Realty, which has invested in secondaries for two decades, represents the traditional long-term players now operating alongside newer entrants in an increasingly crowded but dynamic market environment.
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