Building the Future: Megatrends and Investment Themes

Blackstone’s position as the world’s largest alternative asset manager, with 250 portfolio companies, 12,600 real estate assets, and over 4,750 credit issuers, provides unparalleled insight into emerging trends and patterns. ^{[ 1 ]} All of these assets generate data, from leasing and employment trends to sentiment surveys of portfolio company CEOs. This data enables us to spot patterns early–often before they’re visible to others. More broadly, with these insights, we can identify enduring themes across geographies and sectors and build conviction. We then invest at scale, putting the full force of our capital behind our best ideas.

A clear example is in our real estate portfolio. In 2010, we invested in several warehouses, calculating that they would perform well as supply declined and GDP recovered in the wake of the Global Financial Crisis. In short order, these investments exceeded our initial performance expectations, so we took a closer look at our leasing data and saw what was unfolding: the migration of retail sales from brick-and-mortar stores to online platforms. This shift had big implications for warehouses, changing their utility and role in the global economy. We moved quickly to capture this trend, reconfiguring our portfolio to prioritize logistics warehouses. Warehouses went from less than 1% of our real estate equity portfolio in 2010 to 40% in 2024. We ultimately became the largest private owner of warehouses in the world. ^{[ 2 ]}

Another key tenet of our approach to investing is that where we don’t invest is just important as where we do invest. Even before the pandemic amplified remote work trends, we recognized that capital expenditures and tenant improvements for office buildings were rising faster than rents and we intentionally de-emphasized traditional US office properties. In 2007, traditional US office comprised over 60% of our real estate equity portfolio. Today, that figure is less than 2%. Instead, 75% of our global real estate portfolio now consists of our highest conviction sectors: logistics, data centers, and rental housing. ^{[ 3 ]}

This ability—to anticipate how the world is changing and evolve our portfolio to reflect it—is what positions Blackstone for continued leadership and strong performance.

On a related note, power is facing a dramatic supply and demand imbalance. US energy demand has stayed relatively steady since 2005, but power demand is projected to grow by a robust 40% over the next decade. ^{[ 7 ]} An increase of this magnitude transforms a historically stable market into one with ample opportunities for those with capital and expertise to act as solution providers.

A primary reason is that existing infrastructure is already strained, requiring massive investments in power generation, transmission, and distribution. The US power grid, with an average age of over 40 years, lacks the capacity to meet rising demand. ^{[ 8 ]} To keep pace, the country needs to double the grid’s capacity over the next 12 to 13 years, which requires massive capital investment. ^{[ 9 ]} Just connecting current energy projects in the US transmission queue to the grid requires an estimated $3.9 trillion. ^{[ 10 ]}

To address today’s evolving energy needs, we’re investing in opportunities across the entire power infrastructure spectrum. Energy infrastructure represents ~30% of our $50 billion+ infrastructure business, and we have a dedicated energy transition fund. As owners of Invenergy, the largest independent renewables developer and power generation company in North America, we’re helping meet the rising demand for clean power. ^{[ 11 ]} Beyond power generation, Invenergy is active in expanding transmission capacity to support the growing demand and has developed over 4,100 miles of transmission and collection lines, enabling $40 billion of new interconnection, wind and solar investments. ^{[ 12 ]}

Our commitment to power infrastructure extends beyond equity investments. Blackstone is one of the most active lenders in the space, providing capital solutions to companies powering the economy. Through our investments across energy generation, transmission, distribution, critical equipment and services—spanning both debt and equity—we are helping address the intermittency of renewable energy sources. By strategically investing in leading natural gas companies, like our midstream joint venture with EQT and our investment in Tallgrass Energy Partners, we are helping bridge the gap between renewable energy generation and the consistent energy supply needed to power economies.

Just as we apply a multi-faceted approach to building the infrastructure of the future and revolutionizing life sciences—strategically lending and investing across our businesses to drive innovation and impact—our conviction in the consumer is rooted in a similarly comprehensive understanding of generational trends.

Understanding how consumer preferences and spending habits have evolved over time is essential for success in the consumer sector and its adjacent industries. Our Data Science team regularly analyzes real-time spending data, helping frame our outlook on the consumer. From that data, we have identified three key trends that define the modern consumer: the ongoing digitalization of the economy, a shift in spending from goods to experiences, and a continued emphasis on high-quality, trusted brands.

The impact of the digital economy has been especially transformative in retail, with e-commerce now ubiquitous and still outpacing overall retail sales growth. In 2023, standard e-commerce sales grew 9% year-over-year, compared to just 2% growth for brick-and-mortar sales. ^{[ 28 ]} Even more striking, Amazon’s same-day and overnight delivery services increased 70% during the same period, reflecting growing consumer demand for speedier deliveries. ^{[ 29 ]} This trend presents opportunities across sectors, from logistics and related services to online retailers and marketplaces. Projections about this trend informed Blackstone’s significant investments in infrastructure and online platforms such as Adevinta, the world’s largest online classifieds company, operating more than 20 platforms in 10 countries and receiving 2.5 billion monthly visits. ^{[ 30 ]}