Market Conundrum: CRE Investors Making Fewer Big Deals, but Raising More Money

The amount of uncalled or undrawn real estate investment capital, or "dry powder," has grown to staggering levels. This increase has come at a time when the investment climate remains decidedly mixed, with top-quality assets in core markets commanding high valuations after a sustained up-cycle. As a result, investors are increasingly searching elsewhere for properties that offer potentially higher yields. The effects are showing up in deal volume. The total dollar volume for real estate sales of $100 million or more was 19.5% lower in the first half of 2017 compared to the same period in 2016. However, the deal volume for properties at prices of $100 million or less was just 2.3% lower, according to CoStar COMPs data. Those trends were continuing in the third quarter.

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