CRE Analyst’s Post

Dear fund manager, are you: (a) Too big to fail (b) Too small to die, or (c) Too stretched to survive The investment management industry is consolidating. Fast. -- Founders are aging. -- Capital is scarce. -- Investors prefer the biggest players. -- Fees are compressing. -- Performance is slipping. There are roughly 350 active U.S. real estate investment managers. The top 50 control ~$3.5 trillion. The top 10 manage more than the next 40 combined. We expect 30% of managers to go away and the top 10 pulling even further ahead. Sound familiar? History may not repeat itself but it often rhymes. ---- Banking led the way ---- 40 years ago, there were 14,000 banks. Today? Fewer than 4,000. We looked back to see what this shakeout might reveal about where investment management is heading. The patterns might surprise you. ---- History's lessons ---- 1. Too big to fail Big banks rarely went under. With access to capital and cheap funding, they typically survived by buying other big banks, not by stitching together small ones. 2. Too small to die The number of small banks declined by 90%, but they rarely failed. Where'd they go? They grew. Small banks often became big banks. Niche strategies. Local focus. Organic momentum. 3. Too stretched to survive Midsized banks = danger zone. They took more risk. They lacked clear focus. They weren’t big enough to acquire or small enough to survive on their own. 1 in 5 failed—a rate double that of their larger or smaller peers. ---- Implications for investment managers ---- If you're small: grow or graduate. If you're big: buy or be bought. If you're midsized: brace for impact. Entire industries don’t consolidate like this very often. But when they do, the outcomes aren’t random and they’re not always what you’d expect. PS -- You can’t navigate your career if you don’t understand the key players, how they're shifting, what they do, where they sit, and how they get paid. That’s why the first module in our FastTrack curriculum breaks down how the real estate system actually works. Next cohort kicks off May 7. DM us if you're interested.