Fundraising within the commercial real estate sector has fallen for three straight years as pension funds, endowments and institutions wait for clear signs of a market bottom before committing capital. During 2024, $80 billion of aggregate capital was raised targeting North American investment, which is the lowest level since 2016 and far below the peak of $155 billion in 2021, according to Colliers research director Aaron Jodka in a recent analysis.

Core funding, however, has been a bright spot during 2024, with $9.5 billion raised, representing an all-time high, the analysis said. The number of funds seeking capital also increased in 2024 compared with 2023, which could be a sign of market recovery as competition increases. This trend suggests that trophy office could see momentum in the quarters ahead, along with net-lease assets and other best-in-class properties, said Jodka.

Un-invested capital stockpiles are dwindling amid the market’s challenges as cash reserves are being spent down after more than a decade of annual gains, said Jodka. Un-invested capital is down 40% from a peak in 2022, including a 35% decrease last year. Representing the most significant declines, debt was down 51%, core plus plummeted 59% and distressed pulled back 70%.