Galvanize, the asset manager co-founded by billionaire investor Tom Steyer, has reached $1 billion for its commercial real estate strategy focused on energy efficiency. The firm announced the final close of its Real Estate Fund I on Thursday, having deployed $370 million of capital with the remainder structured as loans.

Joseph Sumberg, a former Goldman Sachs banker who runs the portfolio, said the strategy has attracted capital as investors seek natural hedges against fossil fuel price volatility. The fund has invested in 15 buildings across 11 US cities, with refurbishments estimated to avoid more than 8,000 metric tons of emissions annually. Sumberg noted that energy costs in their markets are rising 15% to 20% annually.

A key challenge is the competition from data centers that have "taken a huge market share from all these property types