A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox. Barely four years after investors fled commercial real estate funds, due to fast-rising interest rates, some are now piling back in, as they rotate out of the once-hot private credit play . Investments in non-traded, publicly registered REITs went from $33.2 billion in 2022 to $5.7 billion in 2025, but gains in just the last few months are indicative of a turnaround. These REITs raised $593 million from investors in January, an increase from $467 million in December and $416 million in November, according to tracking from Stanger Investment Banking. Additional data from CoStar shows investments in non-traded REITs have seen gains over the third and fourth quarters of last year. Some expect that as more money comes out of private credit, it will end up in real estate. “We believe that will happen,” said Kevin Gannon, chairman and CEO of Stanger. “We’re starting to see signs of it in the fundraising starting to increase on the real estate side. It’s slower, but starting to increase. And the redemptions on the real estate side have subsided, and what’s going on now is there’s a rotation of capital.” When asked recently on CNBC’s “Squawk on the Street” if investment advisors might be taking clients out of Blackstone Private Credit (BCRED) and putting them into Blackstone Real Estate Income Trust (BREIT), the company’s President and Chief Operating Officer, Jonathan Gray, said, “I don’t know if that’s happening dollar for dollar, but when they get concerned about something, they may pause. I will tell you, interestingly, here in the first quarter, BREIT had its best inflows since 2022.” Commercial real estate values fell 22% from their peak in April 2022 to their trough in December 2023, according to Green Street’s Commercial Property Price Index. They are still seeing a somewhat slow, U-shaped recovery, making the entry point for investors still pretty attractive. As volatility in the stock market increases due to global economic pressures from tariffs and now the war in Iran, hard assets like real estate offer a compelling way to diversify portfolios. As for the sectors that might benefit, Blackstone has done a few specific office deals, but remains focused on data centers, industrials and multifamily, preferring the stability and income of these sectors, according to a person familiar with Blackstone’s internal operations, who wasn’t authorized to speak publicly on the matter. “At the end of the day, it’s about yield. If investors continue to pull from private credit funds, it’s hard to replace that yield in other debt investments,” said Willy Walker, CEO of Walker & Dunlop. “Blackstone had its first positive month of fund flows into the BREIT in February for the first time in four years. Private credit funds dwarf CRE debt funds — trillions versus billions — so any move out of private credit could have a material impact on CRE funds.” And the conversation appears to be heating up quickly, as headlines about redemptions from private credit spread. “I was, yesterday, in a meeting with a couple of very large investors here in New York, and we were debating exactly that topic,” said Christian Ulbrich, president and CEO of JLL, during a March 12 taping of the CNBC Property Play podcast, set to be released next week. “Real assets are coming across as incredibly attractive in an environment of uncertainty we are currently in, and that private credit situation is literally driving people more into the real assets. So yes, potentially, that could be something where real estate or real assets are beneficiaries.” Ulbrich added the caveat that investors would still take the most conservative routes in the newly volatile interest rate environment. That means the best buildings in the best locations, including high-quality office buildings but also logistics facilities, warehouses and multifamily. Interest rates continue to be the wild card, as the expectation had been that they would be much lower by now. Expectations for Federal Reserve interest rate cuts are dropping on concern over energy prices and inflation. This could make the rotation into real estate slower than it might have been otherwise. “We’ve been living through this anomaly,” said Gannon. “It’s lasted way longer than we thought, and now it’s going to be a little longer, perhaps, because of the war. But we think ultimately that money will look for a home, and we’ll look to put that money into real estate if we can show real estate pricing stabilizing.”