Fundraising by closed-end real estate funds held steady in the first quarter, which saw a number of megafunds hold final closes — keeping aggregate equity close to the same pace as the previous quarter, even as the number of funds was cut nearly in half.

The commercial real estate industry continues to face challenges amid a higher-interest-rate environment, which has seen valuation declines and a decrease in acquisition activity. Investors have reacted to this by focusing on re-ups with trusted managers, and larger funds have collected the lion’s share of allocations.

Some $19.0 billion was raised by the 13 real estate–focused funds holding a final close in first quarter 2024, according to the latest results from Institutional Real Estate, Inc.’s proprietary database, IREI.Q. By comparison, 22 closed-end real estate funds held a final close in fourth quarter 2023 with total equity of $23.7 billion, and 19 funds raised $14.4 billion in third quarter 2023. In 20