A remark many have made to GlobeSt.com over the last year or two is the volume of dry powder sitting on the sidelines, the possessors of the capital waiting for the right moment to leap in and take advantage of the market. Looking for distressed properties. Maybe feeling safe to lend to others.
The discussions are rarely specific. No one knows how tall the stacks of long green stand, like luxuriant forests of foliage that never browns and dries. At least not until now. Cushman & Wakefield took a stab at estimating how much is ready to move in.
They said $419 billion is globally available, with $250 billion of that settled in the U.S. All the capital put together is more than double the amount raised in the wake of the Great Recession. That may be because of the pandemic rescue plans that the federal government, Federal Reserve, and even state and local officials put into place.
Recommended For You
Many economists had argued that the massive amounts of liquidity sent directly to consumers and businesses and also injected into markets had created consumer-driven inflation, but there has been a growing recognition that inflation was supply-induced by massive pandemic supply chain disruptions and the war in Ukraine. The flood of money in many cases made its way to investors who, discouraged by low interest rates, looked to alternative investments, commercial real estate being one of them.
When inflation cranked up and then when the Fed addressed it with higher interest rates, a lot of money was held to the side as the investors were waiting for good return opportunity, which they knew would eventually come back. That explains why out of institutional investors that Preqin surveyed, according to C&W, 84% "expect to increase or hold their target allocations to CRE over the longer term."
"While lending standards remain historically tight and in contractionary territory, we've seen early signs of an inflection in multifamily and construction," C&W said. "Meanwhile, the office sector is likely dragging the commercial loan series into tighter territory. A Fed pivot will give lenders more clarity, stabilize financials markets (base interest rates), and provide a healthier foundation for lending."
When will this much-awaited day arrive? C&W's best guess is the second half of 2024.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
