During a few years when returns seemed easy and gains and capital inflows hit record levels, general partners of private equity funds could do no wrong. Since inflation, double-digit reductions in asset values across most classes, and a series of banking failures, those days are pretty much over, says a report and survey results from legal firm Barnes & Thornburg.

Specifically in real estate investment, the firm says that caution has become common. "The real estate sector – originally thought to be a solid hedge against inflation – has been grappling with high interest rates, mixed demand, and low occupancy levels in certain assets, like office buildings," the firm wrote.

Not that investors have given up on CRE, but in every aspect asked about — investor return expectations, rising interest rates, work from home/work from office trends, population redistribution, commercial mortgage rates, cap rates, and selective retail preferences — a majority of PE investors who have real estate as a focus area described each area as either a challenge or a combination of challenge and opportunity.