Survey Unveils “Positive Outlook” for Capital Raise in Early 2025

The current commercial real estate market continues to present various challenges in raising capital. The investment management company Agora surveyed 250 general partner (GP)decision-makers to clarify this issue.

Some of the responses indicated that:

• 21% of respondents rely on private equity as a primary capital source, with REIT structures following

• 50% of respondents pointed to interest rates as the main challenge in raising capital

• 40% of those surveyed said maintaining investor content is the best strategy

• 81% of the respondents said they have a positive outlook for capital raising over the next six months

The Survey and Some Surprises

Asaf Raz, Agora’s Vice President of Marketing, told Connect CRE that many of the survey results aligned with expectations. But some responses were surprising.

While diversification in funding sources isn’t new, “the scale of the diversification stood out,” he explained. “The data revealed that private equity remains a significant player, but reliance on alternative sources such as REITs, crowdfunding and government programs is increasing.”

The survey also determined that over 70% of firms raised $1 million or less within the past six months. “This highlights a broader trend of smaller operators maintaining relevance in a challenging market,” Raz observed.

Even with increasing costs and high interest rates, smaller-scale investments and creative funding strategies are leading to success. “This reflects the adaptability and resilience of the industry,” Raz said.

The Ongoing Appeal of Residential

The survey reported that 68% of respondents saw higher returns from residential investments. Raz explained that “residential” encompasses all housing-related investments, including single-family, multifamily and build-to-rent assets.

“The continued dominance of residential and multifamily investments as top-performing asset classes was anticipated, given the persistent housing shortage and strong rental demand,” he explained.

Raz added that Agora sees more build-to-rent opportunities in the future. While BTR faces challenges (like interest rates and financing), “the segment is drawing increasing attention, with major players moving into the space,” Raz observed. “This shift opens up substantial opportunities for mid-sized and large real estate companies to tap into this growing market.”

Diversified Funding—Here to Stay?

Raz said that a continual interest rate decline could make traditional lending sources more appealing to investors. On the other hand, lower interest rates likely won’t dampen CRE’s ongoing reliance on diversified funding sources.

For one thing, “many operators have found value in private equity and other alternative sources, which offer flexibility, tailored funding structures and faster access to capital,” Raz said.

Furthermore, many investors established relationships with nontraditional lenders. “While banks will most likely regain market share, the preference for multiple capital sources will likely remain, ensuring stability and reducing dependency on any single funding channel,” according to Raz.