Market Views: Dealmaking, Disruption, and Real Estate’s Recovery
Jon Gray, Blackstone President & COO: I’m wearing my boots here today because it’s been snowing in New York, but it’s always sunny somewhere when it comes to investing.
Our companies in private equity had 9% revenue growth in the fourth quarter, which is pretty exceptional. We continue to see a low level of defaults across our private credit portfolio. There’s some weakness on the consumer side with lower- and middle-income consumers. Europe is slower. We see less revenue growth there, but overall, it’s a pretty good picture. I’d say the headline on inflation is it continues to decelerate. Particularly around shelter costs, where the government data lags (Figure: US Shelter CPI).
1 Inflation has gone from being obviously a massive problem three or four years ago, to sort of a steady declining problem that hopefully here over the next year or two really goes away. The deal environment really has reached escape velocity. Really reminds me of that period of 2013-14, where after five years post-GFC, the market sort of reopened. That’s what we feel like is happening today. Medline is something I’m particularly excited about because it’s a company we bought back in 2021. We did a seven plus billion-dollar IPO, the biggest sponsor IPO of all time. And it really says to me that some of the great businesses that we buy and own, that there’s a good market for those types of companies.
My favorite way to play AI is power. It’s hard to pick who’s gonna win the large language model wars, it’s hard to pick which application software company is gonna work out over time. But it’s pretty easy to say, the data center’s gonna plug into the wall. The robots are gonna plug into the wall. The autonomous vehicles are gonna plug into the wall. If you don’t have power, none of this works. It’s been an industry that’s been pretty sleepy for 25 years, as we got more efficient with the use of power, and in many ways, we deindustrialized. Now those things are changing.
In real estate, I think we’re getting closer to the steeper phase of the recovery (Figure: Real Estate Recovery Across Cycles).
2 In our Link Logistics portfolio, we saw the best leasing volume ever, up 38% year-on-year. We’ve seen terrific performance in our real estate credit area as fundamentals have improved and loans have gotten refinanced. We saw the best office leasing volume in New York City going back to pre-COVID periods. And so, you can feel the tumblers start to fall into place here. That will be very positive, we think, for real estate over time.
To me, the biggest thing is the disruption that’s coming. How whole industries will be radically changed and, in some cases, eliminated when you have super intelligence at massive scale and super low cost. I think anticipating the kind of change that can come is probably the most important thing we as investors can do.
Notes:
1. Shelter CPI: US Bureau of Labor Statistics, as of December 2025. BX-derived Third-Party Shelter CPI: RealPage Market Analytics, as of December 2025. Zelman & Associates, as of November 2025. John Burns Real Estate Consulting, as of October 2025. Reflects a blended market rate for multifamily and single-family rental housing based on the composition of US occupied housing stock.
2. NCREIF ODCE Total Return Index – Gross Returns. Early 90s: Q3 1993 – Q2 2008. Post-GFC: Q1 2010 – Q3 2022. Today: Q3 2024 – Q3 2025.
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