The challenges facing the commercial real estate industry — rising interest rates, valuation resets, a drop in transaction volume — have begun to affect fundraising activity. Only $14.1 billion was raised by the 17 funds holding a final close in the final quarter of 2023, according to the latest results from Institutional Real Estate, Inc.’s proprietary database, IREI.Q.

That follows only $14.7 billion from 18 funds holding a final close in the third quarter, and the second quarter’s $54.7 billion includes the $30.4 billion haul by Blackstone Real Estate Partners X, the 10th fund in Blackstone’s opportunistic real estate fund series and the largest closed-end real estate private equity fund ever. Even with the Blackstone fund excluded, second half fundraising is significantly behind that of the first half.

Looking at 2023 as a whole, the year saw 77 real estate funds hold a final close, with a total fundraise of $103.7 billion. Those figures were 163 funds an