Real Estate Private Equity Needs to Prioritize Succession Planning

Commercial real estate private equity fundraising is struggling this year in the face of rising interest rates, and most money is funneling to large, influential fund managers. The COVID-19 pandemic sparked an exodus of senior CRE leaders from the industry or to other firms, and today’s market environment could spark another.

The low-interest rate, surging deal-making environment of the last real estate investment cycle pre-pandemic created a remarkable window of wealth generation for senior leaders and decision-makers, but that climate is long gone. What is left in 2026 is a much slower market predicated on discipline and selective investment, but weighed by lower returns, expensive debt, rising rates, persistent distress, and economic instability driven by inflationary pressure.

In CRE, the team you build in good times is different from the team you build when times are hard. Funds raised over the last five years face a tougher path to the outperformance and returns generated last cycle. Executives and senior professionals who built their careers and net worth managing fund vehicles last cycle are considering whether it’s worth it to grind through uncertainty over the next several years. 

That raises a pointed question: Are CRE investment platforms prepared to replace them?  

Over the last six months, the pressure of the top job has pushed 34 percent of CEOs at companies with at least $100 million in revenue to consider stepping down, while two-thirds of CEOs plan to replace a C-suite executive over the next six months, according to the Boston Consulting Group. CEOs in corporate America are also getting older, but the serial executive is disappearing, creating more opportunities for first-timers, according to the National Bureau of Economic Research. 

But leadership continuity and experience is important in real estate private equity. Executives and boards are seeking experienced, dynamic professionals who can underpin long-term strategic priorities, navigate current and future challenges, embrace new technologies, and enhance investor relationships in a crowded fundraising arena.

The first half of this year marked a nine-year low in U.S. private real estate fundraising, according to data from Colliers. Fundraising through the first six months of 2026 fell 38 percent year-over-year to $92.6 billion, as capital chased large fund managers and sponsors. 

Limited partners’ (LPs) dollars are pooling with the largest, most established managers because investors are seeking platforms capable of deploying capital at scale into diversified strategies. Last year, the top 20 managers captured roughly 51 percent of trailing five-year, closed-end real estate fundraising dollars, up 5 percent from 2016, according to McKinsey & Company. 

The concentration of capital at the top could mean fewer and more competitive fundraising cycles for senior leaders at small and midsize platforms, as well as a shrinking path to the kind of fund-level economics that drove wealth creation last cycle. It could also squeeze mid-career executives at smaller platforms, many of which are unlikely to survive the fundraising slowdown at all, according to an S&P Global Market Intelligence report. 

Many leaders evaluate the return on their time later in their careers. Some industry veterans are already exploring whether it’s worth it to stick it out in their prime earning years or instead seek “greener” pastures where the bulk of capital is gathering and the deal pipeline is clearer. 

Firms must prepare by proactively evaluating their next generation of leaders and establishing a clear transition plan. LPs are demanding it. 

Protecting returns for key stakeholders is a priority, and succession planning is a vulnerability, the absence of which is a governance problem. Last year, about 96 percent of LPs reported that succession readiness and governance maturity is important in their decisions to re-up with general partners (GPs), but less than half of GPs have a formal succession plan in place. Thirty percent of GPs said they established a succession plan only after LP investors pressured them to do so. 

Longer hold periods and tougher paths to exit are adding to leadership succession planning risk. Generally, the median private equity hold period has lengthened to around six years, while about 52 percent of private equity portfolio companies in 2025 carried a hold period of four years or longer, up 9 percent from 2024, according to McKinsey & Company. 

Extended investment timelines risk senior CRE leadership transitions happening mid-cycle rather than between funds, compounding fundraising challenges by jeopardizing leadership continuity.

CRE firms generally look inward for the next batch of leaders, but that’s shifting. Many companies are venturing outside their rosters in search of skill sets they feel will be required to navigate a complex, demanding and ever-evolving market. Depending on a platform’s investment strategy, new leaders will need to enhance an existing team’s approach or have the necessary experience to lead the marketing of a new strategy, evangelizing it to existing and prospective investors.

The last cycle made it easy for CRE private equity platforms to defer hard conversations about succession — strong returns covered for structural gaps. That grace period is ending. Firms that start building bench strength and succession frameworks now, while they still have the luxury of time, will be far better positioned than those that allow for the next liquidity event or executive departure to force the issue.

Kaitlin Kincaid is a senior managing director at Keller Augusta, a commercial real estate recruitment firm that specializes in executive searches.