Written by Zane Willman, Associate Advisor | CCG Real Estate Advisors
There's a quiet shift happening in commercial real estate right now.
While institutions sit on the sidelines waiting for rate cuts, private investors are stepping in, transacting, and getting deals done.
The environment that feels like a headwind is actually acting as a tailwind for the right kind of buyer. Especially in markets where local knowledge is a genuine competitive edge.
The Institutions Tapped Out. Private Capital Didn't.
When the rate environment shifted in 2022, institutional capital largely pulled back. Lending tightened. Deal underwriting got harder. And the big players the ones that need cheap, abundant debt to make their returns work stepped back from the market.
Private investors filled the gap. According to a June 2026 research brief from Marcus & Millichap, private investors have accounted for 55 to 59 percent of all commercial transactions over $2.5 million since 2022 and their dollar volume grew 28 percent in the year ended March 2026. This isn't a blip. It's a structural shift in who is transacting, and why.
Private investors aren't beholden to the same return thresholds or fund mandates that constrain institutional capital. They can move faster, underwrite more creatively, and operate assets in ways that generate value beyond what a cap rate spreadsheet captures on day one.
The Operating Environment Rewards Hands-On Owners
The current market isn't just about who's buying — it's about who's managing. Elevated expenses have made operations the primary battleground for returns. Construction labor costs are up over 15% since 2022. Materials have followed. Insurance — particularly in California — remains a persistent pressure point, with costs up over 26% since 2022 despite moderating from their peak.
In that environment, passive ownership is a liability. The investors who are outperforming are the ones actively managing their assets, reducing vacancy quickly, making targeted capital improvements rather than wholesale renovations, and staying close enough to their properties to catch problems before they become expensive.
This is exactly where the private investor and specifically the locally-based private investor has the strategic advantage over institutional ownership. No asset manager in New York is going to catch that a $300/month landscaping contract is overpriced, or that a specific unit mix in North Park commands a premium over neighborhood averages. Local operators know these things because they live them.
The San Diego Lens
The private investors, properties in the 2 to 100-unit range, has been the domain of our clientele, and that's where the most actionable opportunities exist right now. Sellers in this segment are often long-time owners facing the same expense pressures everyone else is, and their exit motivations create real acquisition opportunities for buyers who know how to underwrite accurately and move with conviction.
What institutions can't do is walk the property, know the submarket from the ground up, and close without a multi-month committee process. What private investors, particularly those working with locally-embedded advisors, can do is identify value where the market hasn't priced it yet, execute efficiently, and work toward a better outcome.
That gap between institutional hesitation and private investor agility is the opportunity window. How long will this window stay open?
Based on the current trajectory, it won't stay open indefinitely.
Something to Takeaway
High interest rates didn't kill the real estate market, they just changed who's winning. Private investors are transacting at a higher rate, growing their share, and outperforming through active management while institutions wait for a more favorable environment.
In San Diego, that means well-advised local investors willing to underwrite carefully and operate actively are sitting in the best seat in the market right now. The question isn't whether opportunity exists. It's whether you have the right team around you to find it and execute on it.
CCG Insights covers commercial and residential real estate trends with a San Diego market focus. CCG Real Estate Advisors is a San Diego-based brokerage specializing in helping investors buy, sell, and evaluate multifamily and commercial real estate opportunities across San Diego and key California markets. If you're looking to position yourself ahead of the next cycle, we'd welcome a conversation. Click our logo below to schedule a free strategy session.
