Where Is The Dry Powder?

The Real Estate Espresso Podcast

Where Is The Dry Powder?

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Welcome to the Real Estate Espresso podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce. We keep hearing the refrain that there’s billions of dollars sitting on the sideline for commercial real estate. If that’s true, then why is it so hard to raise capital in the current environment? Every investor and developer I speak with is saying that investors are sitting on their wallets.

During the middle of the pandemic, we saw two major effects happening simultaneously. We saw demand for rental housing spike during the pandemic and we saw office demand plummet. In 2020 and 2021, there was a gold rush into apartments. 📝(Predicted correction: appartments) At the same time, we saw a significant price inflation and a spike in interest rates starting in 2022. Major players raised billions of dollars waiting for the distress to hit the market. They were often called opportunity funds, which is basically the code for a vulture fund.

Uninvested capital held by these United States funds grew to records in 2022 and 2023 at a time of high interest rates and weak demand for deals…

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