The commercial real estate market is currently facing a number of challenges when it comes to raising capital. To gain more insight into this issue, Agora, an investment management company, conducted a survey of 250 decision-makers from general partner (GP) firms.
Some key findings from the survey include:
– 21% of respondents rely on private equity as their primary source of capital, followed by REIT structures.
– Interest rates were identified as the main challenge in raising capital by 50% of respondents.
– Maintaining investor satisfaction was cited as the most effective strategy by 40% of those surveyed.
– A majority (81%) have a positive outlook for capital raising over the next six months.
Agora’s Vice President of Marketing Asaf Raz shared that while many responses aligned with expectations, there were also some surprises. One notable trend is diversification in funding sources; while private equity remains prominent, there has been an increase in reliance on alternative sources such as REITs and crowdfunding.
The survey also revealed that smaller operators are still able to thrive despite rising costs and interest rates. This highlights their adaptability and resilience within the industry.
Residential investments continue to be popular among investors with 68% reporting higher returns from this asset class. Raz explains that “residential” encompasses various types such as single-family homes and multifamily properties. He also notes that build-to-rent opportunities are becoming more prevalent due to strong demand for rental housing.
While lower interest rates may make traditional lending sources more attractive again for investors, diversified funding options will likely remain popular among CRE firms due to their flexibility and faster access to funds compared to traditional lenders who may take longer processing times.
Overall,the survey suggests a positive outlook for early2025 when it comes toraisingcapital,andtheindustryisexpectedtocontinuetoadaptandthriveinthesefast-changingtimes.Thanksforreading!
