Real estate investment and development executive Don Peebles and private equity veteran Doug McNeely are launching a fund targeting the country's oversupply of office space.

Peebles, who heads The Peebles Corp., and McNeely, who has held high-level roles at BlackRock and the Carlyle Group, seek to raise up to $1.5B for an office-to-residential conversion fund, Bloomberg first reported. It is the first initiative from the duo's new firm, Donahue Douglas, which they launched late last year.

“We're building a transformational firm, world class, and we really want to impact the way people live, work and invest,” McNeely told Bisnow in an interview Friday. “So we do have great ambition. We're an alternative asset management company. Our first strategy is this strategy.”

The firm expects to raise the funds over the next six months.

McNeely told Bisnow the fund has received preliminary interest for two-thirds of its targeted raise. He said the partnership is in conversations with institutional, high net worth, sovereign wealth fund and offshore investors.

The plan is to deploy the funds into 10 top-tier cities: D.C., New York, Boston, Los Angeles, Charlotte, Miami, Nashville, Dallas, Atlanta and San Francisco.

“I would say there's a generational opportunity to invest in these areas,” McNeely said.

D.C. and New York are at the top of that list. D.C. is of particular interest due to its federal footprint, which the Trump administration has signaled it intends to drastically cut over the next few years.

But that opportunity extends beyond the nation’s capital, McNeely said.

“The federal government is a property owner across the country, so that might be part of the strategy,” he said.

Peebles founded his namesake investment and development corporation in 1983. The firm has developed more than 10M SF and invested more than $8B across U.S. gateway cities including New York, Boston, Washington, D.C., Charlotte, Atlanta, Miami, San Francisco, and Durham, North Carolina, according to its website.

McNeely joined the Carlyle Group as a partner in 2022 after nearly nine years at BlackRock. He left Carlyle in 2024, he told Bisnow.

Overall office availability nationwide stood at 23.3% at the end of the first quarter, according to Avison Young.

The nationwide office-to-residential conversion pipeline reached a record 70,700 units early this year, according to a RentCafe study. That is more than triple the 23,100 units that were on the boards in 2022.

“This isn't a problem — or isn't an opportunity — that's going to be solved over the next year or so,” McNeely said. “This is a long-term business for us.”