Sculptor Real Estate on capital rotating to non-traditional assets

March 2, 2026 - 06:09

In today's unpredictable financial landscape, a significant rotation of capital is underway within the real estate sector. According to industry expert Steven Orbuch, founder and president of Sculptor Real Estate, institutional investors are actively moving away from conventional open-end funds. Instead, they are seeking refuge and opportunity in non-traditional asset classes and diversified investment strategies.

The driving force behind this shift is a heightened demand for portfolios that offer durable, predictable cashflow and demonstrate a lower correlation to broader market swings. Traditional funds, often heavily concentrated in core asset types like office and retail, have faced heightened scrutiny as interest rates and economic uncertainty persist. Investors are now prioritizing resilience and strategic diversification to navigate the volatility.

This trend underscores a broader re-evaluation of risk and return profiles within real estate allocations. Strategies now in favor include investments in specialized property sectors, structured debt, and operational real estate businesses that can generate income streams less tied to cyclical economic patterns. The move signals a maturation of investment approach, where capital preservation and steady performance are paramount over sheer scale in traditional markets. This realignment is expected to continue shaping capital flows and fund structures for the foreseeable future.