Family offices and high-net-worth individuals invested $464 billion in commercial real estate last year, outweighing the $347 billion deployed by institutional investors, according to Knight Frank. The shift marks the first time private wealth has exceeded institutional capital in the sector, a reversal driven by stock market gains and household wealth that climbed $12.8 trillion in the second quarter of 2026 alone, the Federal Reserve reported.

Commercial real estate investment reached $263.7 billion in the third quarter, an 89 percent increase over the same period last year, according to MSCI. Jim Costello, executive director at MSCI, said institutional money and cross-border capital have been net sellers. Private capital is moving in, he said.

The number of family offices has grown 50 percent since 2019, rising from about 6,000 to more than 9,200 today, wealth-intelligence firm Altrata found. More than a third of U.S. family offices planned to increase their exposure to real estate, according to a J.P. Morgan Private Bank poll from February. Many have made real estate a programmatic part of their strategy going forward.

Adrian Ponsen, senior economist at Cushman & Wakefield, said the top 1 percent of the U.S. has seen its aggregate net worth more than double in the last 10 years. That wealth creation has outpaced growth in assets under management for public pension funds and institutional investors, he said. Family offices are deploying faster into commercial real estate and are uniquely well suited for current market conditions, he said.

Office properties illustrate the opportunity for risk-tolerant capital. Fundamentals are stabilizing, leasing is increasing, Class A vacancy is coming down quickly, and the sector has been through a major value correction, Ponsen said. Delinquencies of commercial mortgage-backed securities tied to office properties reached 12.16 percent in September, compared with 8 percent for the overall market, according to Colliers.

The family offices setting pricing today will be the ones institutional capital follows in eighteen months, not the other way around, family office advisor Jaf Glazer has cautioned.

Institutional investors often remain tied to legacy office properties carrying higher valuations and debt. A lot of institutions have capital locked in legacy funds that they put money into when interest rates were lower, when the 10-Year Treasury was 100 to 200 basis points or more lower than it is today, Ponsen said. The general partners managing those funds are hesitant to sell and liquidate because they want to preserve their equity, which is tying up institutional funds and slowing their ability to recycle and reallocate new funds into the sector, he said.

The third quarter included $106 billion in entity-level deals, the highest quarterly amount on record, out of the $263.7 billion total. Those transactions included the multifamily merger of AvalonBay and Equity Residential and the Aligned Data Centers joint venture between the Artificial Intelligence Infrastructure Partnership, MGX and BlackRock's Global Infrastructure Partners. At some point, when institutional investors see that family offices have been making money doing this, that is what institutional buyers will follow at a later date, Costello said. That's kind of typical — the private capital comes first, he said.