The world of private real estate funds investing is experiencing a major about-face: When Starwood Capital Group tightened withdrawal requests from its $10 billion fund, waves went through the $90 billion industry, according to a report in the Wall Street Journal.  "Investors in these funds, mostly individuals who paid as little as $2,500, appear worried that their funds might also tighten the withdrawal spigot, forcing them to wait indefinitely in line if they want to cash out," they wrote.

But this isn't a one-month or one-quarter issue. Private CRE funds have been feeling pressure for years now.

Step back to the second quarter of 2022. That's when the Federal Reserve started raising interest rates to battle inflation. "Managers raised just $19.8 billion in the first quarter, the lowest total since 2011," wrote PERE. "This has led to longer fundraising periods, which now stretch to an average of 22 months in 2024, more than double the timeframe in 2019, PERE data showed."