[Podcast] Unlocking Private Market Potential
Insights from Jim Dowd, CEO, North Capital
Context
Jim Dowd is CEO of North Capital, a firm that focuses on private capital markets (investments not traded on public stock exchanges). The company provides brokerage, advisory, and trading infrastructure for exempt securities (private investments that are exempt from SEC registration, like most real estate syndications).
With 40 years of experience across both the buy side (investing capital) and sell side (structuring and selling investments), Jim isn’t a sponsor, lender, or LP but rather someone who sees how deals are structured, sold, and ultimately traded across the broader market.
He views real estate through a systems lens:
→ how capital flows in and out of deals
→ where regulatory friction slows things down
→ and how limited liquidity affects investor behavior
It is through this perspective that makes his commentary so useful - especially now, as capital becomes more selective and investors grow more cautious.
Listen/watch the full podcast conversation here >>
Here are the key insights from our conversation – chosen specifically to help you make better, more informed investment decisions in today’s market.
1. Private Markets Are Growing - But Liquidity is the Blind Spot
Jim sees a long-term shift from public to private markets. This trend has been driven by:
- Rising regulatory costs of public capital raises
- Falling costs and barriers to entry in private placements
- Broader investor access due to reduced minimums (from $250K+ to $10K–$20K)
But here’s the warning: private securities still lack liquidity. Investors participating in these syndicated deals should recognize that they are locked in, sometimes for years, with no clear exit.
“It’s like three guys trying to run through a door at the same time – when everyone wants out, they can’t.”
Solution: Jim’s firm has built an Alternative Trading System (ATS) to create secondary markets for private securities, a concept CRE sponsors might want to look at.
While not yet equivalent to public exchanges, these platforms offer an emerging way to address investor liquidity concerns and could give forward-thinking sponsors a competitive edge.
2. Don’t Be Fooled by the Illusion of Diversification
Many sponsors pitch private equity real estate as an uncorrelated asset class, perfect for diversifying out of stocks and bonds. Jim challenges this narrative.
“In a crisis, all risk assets tend to correlate. The illusion of diversification is mostly due to slow re-pricing in private markets.”
Takeaway: Sponsors should be transparent with LPs. While real estate is a solid long-term asset, it’s not immune to systemic shocks. Treating it as a diversification tool must come with proper liquidity and risk disclosures.
3. Risk Has Moved From Banks to Private Markets
Jim argues that the risk which once destabilized the banking sector during the GFC has now migrated to private markets.
The positive spin: these markets are mostly backed by equity, not federally insured deposits, reducing systemic risk. Investors (LPs) should understand that the margin for error in private real estate has shrunk. Mispricing risk in this environment is more likely to catch up with you, especially in a rising rate context.
4. The 10-Year Treasury: The Most Important Metric in CRE
Jim highlights the 10-year Treasury yield as the single most important signal CRE sponsors should track. Why?
“A 6% cap rate in a 2% Treasury environment is fundamentally different than the same cap rate in a 4.5% Treasury world. That delta blows up every underwriting model.”
Cap rate spreads are compressing. And yet, many sponsors haven’t recalibrated assumptions.
Jim’s advice: treat macro indicators like interest rates and liquidity conditions as core components of your investment thesis, not just afterthoughts.
5. Investor Behavior Has Changed: Active Risk is Now in Private Markets
Jim sees a structural shift in how investors approach risk:
- Liquid portfolios (ETFs, mutual funds) are increasingly passive and macro-driven.
- Private investments, including real estate, are now where most investors take active risk.
- For sponsors, this has profound implications:
- Investor trust and manager selection matter more than ever. Sponsors must demonstrate operational excellence and a clear, differentiated strategy.
- Geographic proximity still matters. Many large managers raise capital locally. Relationships built within a 100-mile radius still drive much of the private capital flow.
6. On Crypto and Tokenization: Don’t Confuse the Two
North Capital does not allocate to crypto but Jim is bullish on blockchain infrastructure for private markets, especially tokenization.
“Blockchain could enable scalable, transparent, and low-cost transactions for private securities – if regulators allow it.”
Tokenization may hold long-term promise for CRE sponsors looking to expand liquidity, access global investors, and reduce friction. But the infrastructure and regulatory frameworks are still evolving.
7. Investor Advice: Time in the Market Beats Timing the Market
Jim’s advice to investors sitting on cash (including his own son) is simple: don’t try to time the market. Instead:
- Keep short-term money in treasuries or cash equivalents
- Deploy long-term capital systematically over a 3–12 month window
- Accept volatility as the price of long-term outperformance
For sponsors, this means messaging matters. Emphasize long-term fundamentals over short-term fear. Help investors contextualize volatility and maintain confidence in your strategy.
8. Watch for These Signals: What Could Change the Outlook
Jim tracks two key macro indicators to signal inflection points:
- The 10-Year Treasury yield (as mentioned above)
- Capital flows in public markets – a pullback here could foreshadow slower fundraising in private markets.
Beyond markets, two external shocks could force sponsors to reevaluate assumptions:
- A geopolitical crisis (India–Pakistan tensions, Middle East escalation, Ukraine/Russia fallout)
- A surprise inflation spike, particularly driven by tariffs, energy, or trade policy shocks
Investors need to ask: “Can my portfolio withstand a 30–40% drawdown without breaking my long term plans?”
If the answer is no, you have too much exposure to risk and should dial back.
Final Takeaway for CRE Sponsors and Investors
Jim Dowd’s insights are a timely reminder that capital formation in private real estate markets is entering a new phase – defined by rising macro uncertainty, evolving liquidity expectations, and heightened investor scrutiny.
Sponsors who embrace transparency, align offerings with institutional risk frameworks, and prepare for greater regulatory and market sophistication will be best positioned to lead, and raise, in this new environment.
Thanks,
Adam
Listen to the full episode here >>
Join the conversation on LinkedIn here >>