Q3 2024 U.S. Capital Markets overview

In the third quarter of 2024, commercial real estate debt origination saw a significant increase compared to the first half of the year, bringing the total volume to much higher levels, though still below long-term trends. Investment sales have remained subdued across sectors, but there are signs of growing interest from certain private investors, suggesting some market stabilization. A number of opportunistic funds, are preparing to take advantage of potential market improvements, with expectations of strong returns as conditions shift.

+80.4%

Change in debt origination in Q3 2024 compared to 1H 2024

Commercial real estate debt origination almost doubled in the third quarter compared to the first half of 2024 with $197 billion in origination volume bringing the YTD total to $441 billion. The large uptick can be attributed mainly to an increase in refinancing activity; however, the injection of debt into the market remained significantly below historical levels.

-21.4%

Change in investment sales volume relative to 2023 YTD

Equity markets, much like debt markets, remain a heavily challenged environment, and the 2024 year-to-date total of $181 billion in investment sales shows suppression across the board that is not limited to office. Private investors have been notably more present in the third quarter of the year relative to the second quarter—a sign that prices have begun to bottom out in certain markets.

$184B

Dry powder at close-ended funds with a vintage from 2014-2024 

The amount of dry powder that is ready to be deployed sits overwhelmingly in the opportunistic or value-add vehicles, with Blackstone raising $30 billion in the largest real estate fund ever, specifically for opportunistic investments. An overwhelming majority of these opportunistic funds are targeting IRRs over 20%, which would indicate a heavy bet on a rebound in pricing as interest rates are cut. Note: this figure includes all property sectors, including diversified funds.

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