Real estate fundraising encountered a significant bump in the road in third quarter 2023. Only $13.1 billion was raised by the 16 funds holding a final close in July–September, according to the latest results from Institutional Real Estate, Inc.’s proprietary database, IREI.Q.

Investors are taking a wait-and-see posture as we move into the final months of 2023, given the many uncertainties facing the market. Commercial real estate transaction volume is down amid a wide bid-ask spread between buyers and sellers. Rising interest rates — and the associated uncertainty about how long rates will remain elevated — are set to force some repricing of assets, and those with dry powder may be able to take advantage of distressed opportunities that arise.

The paltry fundraising total in the third quarter was a dramatic comedown from the $20.2 billion raised by funds holding a final close in the first quarter and the $54.7 billion raised by funds holding a final close in t