Any good investor will diversify their investments, so maybe the funds themselves are not investing in real date but the investors of the funds and probably the managers do it.

More likely that their LPs are the ones investing in both.

And GPs would risk their promotes on their investment returns to benefit their LPs unrelated investments? Give your head a shake…

The fund isn't doing the investing in real estate, the individuals controlling the funds are. Anyway, that's why I said it's a conspiracy theory but the incentives line up like I mentioned in another comment.

But it's a conspiracy theory that doesn't even require a explicit coordination, just people acting in their own self interest.

If you argue that WFH improves productivity why would they risk their company investment returns in favour of their real estate returns?

Because that would involve these people caring about their "boots on the ground" or thinking in the long term. Those two things to happen less and less as things scale up and become public respectively.

I think they realize the truth which is that productive people can be productive anywhere. Do they care about the toll a 2-hour commute takes on the workers or how that translates into deliverables and timelines? Ask yourself if this sounds likely.

Also they understand that most of these companies are 100% losses anyway, but real estate investments are much less likely to go to zero. (Plus rent is just cold hard cash.)

David Sachs whinges about his SF real estate portfolio nearly every episode of the all in podcast.