By Ken Caplan with Kristin Roesch
These seismic shifts, which are redefining industries and consumer behaviors, present both challenges and significant opportunities. At Blackstone, we believe we are uniquely positioned to identify and capture these opportunities with our people, processes and years of experience combined with the scale and scope of our capital.
In this piece, we explore how Blackstone aims to be at the forefront of the megatrends shaping the future across artificial intelligence (AI), infrastructure, life sciences, consumer sectors and the evolution of India—some of our highest-conviction investment themes.
Blackstone’s position as the world’s largest alternative asset manager, with 250 portfolio companies, 12,600 real estate assets, and over 4,750 credit issuers, provides unparalleled insight into emerging trends and patterns.[ 1 ] All of these assets generate data, from leasing and employment trends to sentiment surveys of portfolio company CEOs. This data enables us to spot patterns early–often before they’re visible to others. More broadly, with these insights, we can identify enduring themes across geographies and sectors and build conviction. We then invest at scale, putting the full force of our capital behind our best ideas.
A clear example is in our real estate portfolio. In 2010, we invested in several warehouses, calculating that they would perform well as supply declined and GDP recovered in the wake of the Global Financial Crisis. In short order, these investments exceeded our initial performance expectations, so we took a closer look at our leasing data and saw what was unfolding: the migration of retail sales from brick-and-mortar stores to online platforms. This shift had big implications for warehouses, changing their utility and role in the global economy. We moved quickly to capture this trend, reconfiguring our portfolio to prioritize logistics warehouses. Warehouses went from less than 1% of our real estate equity portfolio in 2010 to 40% in 2024. We ultimately became the largest private owner of warehouses in the world.[ 2 ]
Another key tenet of our approach to investing is that where we don’t invest is just important as where we do invest. Even before the pandemic amplified remote work trends, we recognized that capital expenditures and tenant improvements for office buildings were rising faster than rents and we intentionally de-emphasized traditional US office properties. In 2007, traditional US office comprised over 60% of our real estate equity portfolio. Today, that figure is less than 2%. Instead, 75% of our global real estate portfolio now consists of our highest conviction sectors: logistics, data centers, and rental housing.[ 3 ]
This ability—to anticipate how the world is changing and evolve our portfolio to reflect it—is what positions Blackstone for continued leadership and strong performance.
Source: 2007 figures as of June 30, 2007. Today’s figures as of September 30, 2024. Concentration percentages based on equity at Blackstone Real Estate share.
We see a significant opportunity to invest in the companies and assets driving the next phase of economic growth. We view this as building the infrastructure of the future, focusing particularly on four megatrends: AI, power, life sciences and the digital economy.
Artificial intelligence is powered by data, and in recent years total data generation has been doubling every three years. Between 2010 and 2025, data created, consumed and stored will have increased over 100x.[ 4 ] All of this data needs a place to live, which in turn has unlocked enormous need for data centers. And it isn’t just AI—social media, cloud migration, content creation and media streaming are all contributing to more data. Meeting this demand and fully capturing the AI opportunity will require an estimated $2 trillion in global digital infrastructure investment by 2030.[ 5 ]
This growth has helped create what we believe is a generational investment opportunity in data centers, and similar to our early investments in logistics, we have established an early and leading position. In 2021, we acquired QTS, a publicly traded data center company, for $10 billion. In the first three and a half years of our ownership, QTS grew its leased portfolio more than ninefold, becoming the fastest-growing data center company globally. In 2024, our $16 billion acquisition of AirTrunk, Asia’s largest data center operator, solidified our leadership in this space. We also own the largest powered land bank in Europe. Today, our data center portfolio consists of $70 billion of leased properties operating or under construction and a land bank that can support an additional $100 billion of development, making us the largest data center provider in the world.[ 6 ]
Source: (1) International Data Corporation (IDC), as of May 2024. 2024 and 2025 represent year-end estimates. (2) datacenterHawk, as of September 30, 2024. Reflects gross absorption of the trailing twelve-month periods as of the dates indicated.
This AI infrastructure opportunity isn’t limited to just equity ownership or data centers. Blackstone is also one of the most active lenders to data centers and invests in adjacent sectors like backup battery storage, cooling systems, and semiconductor chips—critical components for operational resilience. Our ability to deploy both equity and debt capital uniquely positions us to action opportunities and capture outsized returns across the AI infrastructure ecosystem.
On a related note, power is facing a dramatic supply and demand imbalance. US energy demand has stayed relatively steady since 2005, but power demand is projected to grow by a robust 40% over the next decade.[ 7 ] An increase of this magnitude transforms a historically stable market into one with ample opportunities for those with capital and expertise to act as solution providers.
A primary reason is that existing infrastructure is already strained, requiring massive investments in power generation, transmission, and distribution. The US power grid, with an average age of over 40 years, lacks the capacity to meet rising demand.[ 8 ] To keep pace, the country needs to double the grid’s capacity over the next 12 to 13 years, which requires massive capital investment.[ 9 ] Just connecting current energy projects in the US transmission queue to the grid requires an estimated $3.9 trillion.[ 10 ]
To address today’s evolving energy needs, we’re investing in opportunities across the entire power infrastructure spectrum. Energy infrastructure represents ~30% of our $50 billion+ infrastructure business, and we have a dedicated energy transition fund. As owners of Invenergy, the largest independent renewables developer and power generation company in North America, we’re helping meet the rising demand for clean power.[ 11 ] Beyond power generation, Invenergy is active in expanding transmission capacity to support the growing demand and has developed over 4,100 miles of transmission and collection lines, enabling $40 billion of new interconnection, wind and solar investments.[ 12 ]
Our commitment to power infrastructure extends beyond equity investments. Blackstone is one of the most active lenders in the space, providing capital solutions to companies powering the economy. Through our investments across energy generation, transmission, distribution, critical equipment and services—spanning both debt and equity—we are helping address the intermittency of renewable energy sources. By strategically investing in leading natural gas companies, like our midstream joint venture with EQT and our investment in Tallgrass Energy Partners, we are helping bridge the gap between renewable energy generation and the consistent energy supply needed to power economies.
Source: EIA as of November 2024 and NREL as of August 2022. Reflects total net electricity generation. Figures for 2024 and beyond reflect estimates.
Another way Blackstone is demonstrating leadership in building the infrastructure of the future is by investing in life sciences innovation. As scientists begin to use AI and machine learning (ML) together with genetics and genomics, they are discovering genes that cause diseases at an unprecedented pace. It took 13 years, from 1990 to 2003, to sequence the first human genome and it cost $3 billion.[ 13 ] Today, it can take as little as 3 hours and cost $300.[ 14 ] However, while scientists are finding disease – causing genes faster than ever before,[ 15 ] developers of new medicines directed at these disease genes cannot keep up because of the high cost of drug development, which is on average $2.6 billion per new medicine.[ 16 ] Consequently, many promising new therapies remain unfunded because of a funding gap that we estimate to be $172 billion annually.[ 17 ]
This is where Blackstone Life Sciences (BXLS) comes in—partnering with the leading companies of the world to finance the development of innovative medicines and medical technologies in their pipelines so they can reach the patients who need them. One example is our investment in Alnylam, a leading biopharmaceutical company that discovered Leqvio. Leqvio is an RNA medicine exquisitely directed at a gene target discovered by genomics that not only lowers LDL (bad) cholesterol more than 50% on top of the standard of care (statins),[ 18 ] but is given only twice a year versus daily for statins. While LDL cholesterol is the best-known risk factor for heart disease, the leading cause of mortality globally,[ 19 ] more than half of the patients on statins do not take their medicine properly.[ 20 ] Leqvio’s superior profile over the traditional therapy promises to have a material impact on millions of patients,[ 21 ] since 1 of 3 Americans have high LDL cholesterol.[ 22 ] Since BXLS’ investment, Leqvio has been approved in more than 90 countries,[ 23 ] and the marketeer of the medicine, Novartis, has generated $355 million in 2023 sales,[ 24 ] projected to double to $750 million in 2024.[ 25 ] All told, we estimate that this medicine can reach close to $6 billion in peak annual sales.[ 26 ] And that’s just one of the over 160 medicines across numerous different therapeutic areas that our team of MDs and PhDs have helped bring to market.[ 27 ]
Similar to our other highest-conviction themes, we are investing in life sciences across the firm—in our real estate group as the largest life sciences landlord in Cambridge, Massachusetts, lending to biotechnology companies like Amicus Therapeutics that are focused on discovering, developing and delivering novel treatments for rare diseases and in life science services with our strategic investment in Life Science Logistics.
Just as we apply a multi-faceted approach to building the infrastructure of the future and revolutionizing life sciences—strategically lending and investing across our businesses to drive innovation and impact—our conviction in the consumer is rooted in a similarly comprehensive understanding of generational trends.
Understanding how consumer preferences and spending habits have evolved over time is essential for success in the consumer sector and its adjacent industries. Our Data Science team regularly analyzes real-time spending data, helping frame our outlook on the consumer. From that data, we have identified three key trends that define the modern consumer: the ongoing digitalization of the economy, a shift in spending from goods to experiences, and a continued emphasis on high-quality, trusted brands.
The impact of the digital economy has been especially transformative in retail, with e-commerce now ubiquitous and still outpacing overall retail sales growth. In 2023, standard e-commerce sales grew 9% year-over-year, compared to just 2% growth for brick-and-mortar sales.[ 28 ] Even more striking, Amazon’s same-day and overnight delivery services increased 70% during the same period, reflecting growing consumer demand for speedier deliveries.[ 29 ] This trend presents opportunities across sectors, from logistics and related services to online retailers and marketplaces. Projections about this trend informed Blackstone’s significant investments in infrastructure and online platforms such as Adevinta, the world’s largest online classifieds company, operating more than 20 platforms in 10 countries and receiving 2.5 billion monthly visits.[ 30 ]
Source: Brick and Mortar and E-Commerce Sales: US Census Bureau, as of December 31, 2023. Brick and mortar sales reflect total retail sales excluding motor vehicles and parts dealers, gasoline stations, food services and e-commerce sales. Amazon: Amazon 2023 Letter to Shareholders, as of April 11, 2024.
Beyond e-commerce, consumer spending is shifting from goods to experiences. Since 1959, the share of US discretionary spending on goods has decreased by 33%, while spending share on experiences has risen by 63%.[ 31 ] In Blackstone’s portfolio, companies like Merlin Entertainments and Great Wolf Lodge offer unique travel and leisure experiences that align with the modern consumer’s priorities. Similarly, our investment in Cvent and its strategic partner Encore reflects the firm’s thematic focus on hospitality and related industries, leveraging our expertise to meet the growing demand for experiential services in the event space.
Source: US Bureau of Economic Analysis and McKinsey. “Goods” are defined as total spend on goods, less spend on essential goods (e.g., medical products, gasoline). “Experiences” are defined as total spend on experiences (e.g., airfare, food away from home, ticketed entertainment), less spend on essential services (e.g., hair care, laundry). Discretionary spend is defined as total consumer expenditures, less spend on essential items such as housing, utilities, fuel, medical goods and services, and groceries.
While consumer preferences evolve, one thing remains constant: loyalty to strong, high-quality brands. High-quality franchise businesses are especially attractive for investment with their combination of scalability, low capital intensity and steady cash flow growth. Blackstone’s proven track record of accelerating the growth of leading franchise brands, such as Hilton Hotels, made our acquisition of Jersey Mike’s this past year a clear and strategic choice. Known for its exceptional customer loyalty and satisfaction—driven by its food quality, speed of service, and friendly staff—Jersey Mike’s has achieved remarkable growth, opening 1,000 new stores in a little over three years to reach 3,003 locations across the US.[ 32 ] There is still much room to grow in the US and the brand is now beginning to explore the vast potential of international markets. By leveraging Blackstone’s resources and expertise, we aim to enable this next stage of growth both domestically and internationally while supporting investments in technology and digital transformation to strengthen the brand’s competitive edge and scalability but still maintaining the quality that has made the business so successful.
Source: Jersey Mike’s Company data as of November 2024.
In addition to focusing on specific industries, we keep our eye on promising geographies—regions where demographic and economic factors create opportunity. India is one of those regions, supported by strong secular tailwinds, including a growing middle class, a large working-age population and an increasingly integrated economic system. It’s the fifth-largest economy in the world, with 7% GDP growth, and Blackstone is the largest alternatives firm in the country.[ 33 ] India boasts an enormous pool of talented engineers who develop cutting edge technologies for companies worldwide. We’ve invested in the businesses that employ these engineers such as Mphasis, an IT services provider specializing in cloud and digital solutions.
We actively build and grow our businesses in line with our thematic megatrends. For example, when we acquired Sona Comstar, it was initially a combustion engine company. By the time of our full exit in 2023, we transformed the company into a leading supplier for electric vehicles (EV). Today, Sona Comstar supplies a component for one in eight EV differential assemblies sold globally, making it India’s largest EV company.[ 34 ] However, our presence in India extends beyond private equity—we’re also a leader in real estate. We created the country’s first and largest real estate investment trust (REIT) with Embassy REIT, from which we have successfully exited, and India’s second largest logistics platform with Horizon Industrial Parks.[ 35 ] All told, investments in India have totaled over $55 billion in value since we opened our office there nearly 20 years ago, and it has been the top-performing geography in our private equity business over the last decade.[ 36 ]
Source: IMF World Economic Outlook, October 2024.
Like any year, investors may encounter surprises in 2025, but we believe the megatrends shaping the future will transcend short-term volatility. This new year presents a unique opportunity for investors to engage with what we believe to be generational trends. Infrastructure, life sciences, the modern consumer and the rise of India represent some of the most significant transformations of our time. But investing in megatrends is not just about recognizing change; it’s also about staying ahead, innovating and taking decisive action to seize emerging opportunities. Across the firm and entire capital structure, we are investing in these themes with a disciplined approach, capturing value from this global opportunity.
At Blackstone, real-time data from our diversified portfolio companies, together with our staying power and proven track record, position us to lead these secular megatrends. The unique real-time insights we receive from our portfolio allow us to make informed investment decisions during times of disruption. That’s how we’ve delivered for our investors for nearly 40 years, and it’s how we plan to unlock the value created by this next wave of innovation. While market commentators are focused on identifying AI’s winners from losers—a natural outcome of any transformative technology—we’re taking a more grounded approach. Our focus is on investing in the infrastructure that supports and enables it all, the infrastructure of the future. By leaning into these transformative megatrends, we aim to deliver on our mission of driving long-term growth and outsized performance in this ever-changing world.
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