Starwood Capital Group has raised $10.2 billion for its latest real estate fund, marking the company’s largest fundraise to date. The firm plans to increase its focus on data centers, rental housing, and other commercial real estate segments as artificial intelligence continues to influence property demand worldwide.
According to Chairman Barry Sternlicht, the company could allocate up to 35% of the fund toward data center investments. That figure is significantly higher than the allocation made through Starwood’s previous opportunistic real estate fund.
Sternlicht described the current market environment as both promising and uncertain. Growing demand for AI infrastructure is creating new opportunities for real estate investors. However, it is also changing long-term expectations across several property sectors.
Data centers have become one of the fastest-growing areas in commercial real estate. Rising AI adoption is increasing demand for computing power, cloud infrastructure, and energy-intensive facilities.
Still, data center development remains complex. Projects often require large upfront investments, long development timelines, and reliable access to electricity. Competition for suitable sites has also intensified in recent years.
Starwood plans to manage some of these challenges by co-investing alongside partners and deploying capital gradually across projects.
One of the firm’s earlier funds partnered with MARA Holdings to convert Bitcoin mining facilities into data centers. Those sites already had access to power infrastructure, which could help reduce development barriers. However, future expansion may require additional capital as the conversion projects move forward.
Starwood has already deployed more than $3 billion from the new fund across 20 investments.
These investments include a stake in Echelon Data Centres, a residential land portfolio in Texas, and logistics properties located in Northern Italy.
The fund attracted capital from more than 300 investors. Nearly half of those investors are based in the United States. Starwood also committed $100 million of its own capital to the fund.
Beyond data centers, Starwood continues to monitor opportunities in US rental housing markets.
Sternlicht said some Sun Belt markets are showing signs of recovery after a period of elevated housing supply during the pandemic years. As new inventory gets absorbed, rent growth has started to improve in selected regions.
At the same time, the firm remains cautious about investing in states with stricter housing regulations. Sternlicht pointed to markets such as New York, where regulatory conditions have made rental housing investments less attractive for some investors.
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