Despite a prolonged downturn in capital raising, core real estate investments reached record levels in 2024.

Fundraising Slows:

Commercial real estate (CRE) fundraising in North America fell to $80 billion in 2024, marking the third straight year of declines and hitting its lowest level since 2016. This represents a significant drop from the $155 billion raised at its peak in 2021, as institutional investors remain cautious, awaiting more stable market conditions, according to Colliers’ Aaron Jodka.

Core Investments Gain Momentum:

While overall capital inflows have declined, core real estate strategies experienced unprecedented growth, raising $9.5 billion in 2024. Additionally, the number of funds seeking capital has increased, signaling potential market recovery and growing investor interest in prime assets such as trophy office buildings and net-lease properties.

Declining Dry Powder:

Uninvested capital reserves have continued to shrink, dropping 40% from their 2022 peak. In 2024 alone, these reserves fell by 35%, with debt-focused funds declining 51%, core-plus strategies down 59%, and distressed funds contracting by 70%. A combination of acquisition opportunities, redemption requests, and refinancing challenges has accelerated capital deployment.

Key Takeaway: A Shift on the Horizon?

Despite the slowdown, investor capital remains strong, and the denominator effect where rising stock market values reduce real estate allocations could pave the way for increased deal activity. As debt maturities and distressed asset sales rise, 2025 may see a rebound in CRE investment.