Why Large Asset Managers Are Entering the 1031 Exchange Market and Reshaping It

For more than two decades, the 1031 DST market was a specialized niche within real estate investing, populated primarily by regional sponsors and independent firms. Since 2022, that composition has changed. Blackstone, Ares, Hines, Brookfield, Fortress, and Blue Owl Capital have all entered with institutional-grade platforms.

Competitive dynamics have shifted accordingly. Sponsors backed by firms managing hundreds of billions of dollars in total assets compete alongside regional operators managing a fraction of that. The result is a market that’s both larger and structurally different from what existed five years ago.

What Institutional Sponsors Bring

Large alternative asset managers offer institutional underwriting standards, multi-property diversified DST portfolios, and UPREIT pathway structures that give investors a potential route from DST ownership into non-traded REITs. Blue Owl Capital’s OREX programs, for example, feed into ORENT through an OP unit conversion that can defer taxes indefinitely. Ares leads the market with $432 million raised year-to-date through a diversified offering approach.

These features were uncommon among traditional DST sponsors. A regional firm offering a single-property multi-family DST at 50% leverage operates in a fundamentally different weight class than a sponsor backed by $307 billion in total AUM.

What It Means for Advisors and Investors

Financial advisors placing 1031 exchange capital now have access to a broader range of products from sponsors with deeper institutional resources. Blue Owl Capital’s $80.6 billion Real Assets platform and $17.3 billion in private wealth fundraising for 2025 give OREX access to advisor relationships that smaller sponsors can’t replicate.

One trade-off: concentration at the top. The top three sponsors (Ares, Hines, and Blue Owl Capital) collectively held a disproportionate share of market activity through mid-March 2026. Sponsors ranked fourth through sixth each held between 3% and 7% of year-to-date equity.

Record fundraising in the DST market coincides directly with the entry of institutional sponsors. The market didn’t just grow; its composition was fundamentally altered.