2023 Fundraising Year in Review

2023 Fundraising Year in Review (2)

Commitments to private real estate dropped significantly in 2023

Capital commitments from U.S. public pension funds to privately managed real estate vehicles amounted to $32.7 billion in 2023, marking the lowest fundraising volume recorded since 2013. Year over year, the total commitment volume decreased 50%. This decline in total commitment
volume was primarily driven by a 49% decrease in the number of unique commitments and a 2% decrease in the average commitment size compared to 2022. Q4’s total volume of $6 billion was the lowest quarterly total since Q3 2013, according to FP’s database.

2023 began with the collapse of multiple regional banks and concerns about a looming recession. As the year progressed, several factors contributed to a stagnant real estate market. Inflation concerns, paired with the Federal Reserve's rate hikes, led to increased volatility in market valuations and widened bid-ask spreads. Consequently, cautious investment managers, lacking historical transaction data for guidance, paused transaction activities as borrowing costs soared. According to Preqin's 2024 Global Report, deal flow from Q1-Q3 2023
only accounted for 35% of the annual total of 2022.

To continue reading, download a PDF of the 2023 Fundraising Year in Review.

For additional information, please contact Scott McIntosh.

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