Franklin Templeton's 2026 Private Markets Outlook: A Wealth of Opportunities

Tony Davidow, Senior Alternatives Strategist at the Franklin Templeton Institute, expressed optimism, stating, “We see compelling opportunities across private markets in 2026 and beyond. While some sectors may face headwinds, others boast strong fundamentals and stand to benefit from ongoing structural shifts.” He highlighted the firm's targeted areas for growth, particularly in private equity secondaries, commercial real estate debt, real estate, and infrastructure.

Franklin Templeton reports an uptick in exits within the private equity space, yet many institutions continue to seek liquidity, prompting some to initiate formal secondary programs. The firm sees significant potential in both Limited Partner (LP)-led and General Partner (GP)-led transactions. Davidow pointed out that secondary transactions offer several structural advantages, including the ability to shorten the J-curve and time to distribution, as well as diversifying across vintage, geography, and industry.

The report notes that the majority of recent global flows in private credit have been funneled into direct lending, resulting in compressed lending spreads and growing concerns about long-term sustainability. Franklin Templeton suggests that more attractive opportunities lie in asset-based finance (ABF) and commercial real estate debt (CRE debt). With a significant 'wall of debt' due for refinancing in the coming years, CRE debt emerges as a particularly enticing area for investors.

The real estate sector has experienced a notable decline in valuations since their 2021 peak, largely due to enduring market headwinds and uncertainty surrounding the office sector. Many properties are now available at prices below their replacement costs. Despite ongoing concerns about office spaces, Franklin Templeton identifies promising investment opportunities in multi-family housing, industrial warehouses, and necessity retail sectors.

Franklin Templeton views infrastructure as a burgeoning opportunity, driven by several thematic trends. The firm emphasizes the importance of digital infrastructure, decarbonization, deglobalization, and demographic shifts. Key areas within digital infrastructure include data centers, fiber optics, and cell towers. Additionally, the emphasis on climate change and energy transformation, along with the need to reshore supply chains, presents significant investment prospects.

In their analysis, Franklin Templeton highlights that discerning among investment managers will be crucial in navigating the evolving landscape. The firm anticipates a greater dispersion of returns in the market, suggesting that the deployment of capital will differ significantly from previous vintages (e.g., 2020-2023) in terms of valuation and negotiation dynamics.

Dave Donahoo, Head of Americas, Wealth Management Alternatives, emphasized the firm's commitment to meeting the growing demand for private markets. He stated, “The demand for private markets has accelerated significantly over the past several years.” Franklin Templeton has focused on expanding its global footprint across EMEA, APAC, LatAm, and Canada, while broadening its product shelf and enhancing distribution resources to better serve a diverse client base.

Franklin Templeton's *2026 Private Markets Outlook* paints a picture of optimism and opportunity across various sectors. With strategic insights into private equity, private credit, real estate, and infrastructure, the firm is poised to navigate the complexities of the investment landscape. As the demand for private market investments continues to rise, Franklin Templeton's commitment to innovation and strategic partnerships remains pivotal for its clients' success.

For more information, visit franklintempleton.com and follow the firm on LinkedIn.