Two trend lines in real estate private equity are crossing, which is not necessarily a good thing. Institutional property investors are reducing the number of managers they work with at the same time new managers are emerging almost on a daily basis. To complicate matters, mega-funds, those raising more than $1 billion, are receiving a greater share of the total amount of capital raised in private equity real estate markets.

A smaller number of larger funds are taking more of the capital allocated to real estate. Institutional Real Estate, Inc.’s FundTracker database reports the average size of a real estate private equity fund closing in 2016 and 2017 was approximately $660 million. Average fund size bumped up to $850 million in 2018, according to preliminary numbers for 2018, which saw $112 billion raised by only 132 funds.

“Limited partners are looking to consolidate general partner relationships,” says Michelle Wells, executive vice president of investor rela