Since 2007, private real estate funds that focus on office properties, either solely or part of a wider focus, have raised over $33bn in capital commitments, accounting for approximately 5% of the total capital raised over the same time period. Preqin’s Real Estate Online details 20 private real estate funds currently in market with a focus on office properties, targeting $6.5bn in capital commitments.
Over the past four years, the number of office-focused funds in market has slowly decreased. There were 37 office-focused funds in market in October 2012, but this figure decreased to 30 funds in market in both April 2013 and April 2014. Average target capital over the same time period increased from $367mn in 2012 to $1.4bn in 2014, indicative of fund managers’ attempts to raise larger funds and fewer vehicles. However, in April 2015 the average target size for an office-focused fund in market was just $325mn.
So far in 2015, value added vehicles are the most numerous funds in market (15), representing 30% of the total targeted office-focused capital. While the number of office-focused core-plus, core and debt funds in market is gradually decreasing over time, the single debt fund in market with a focus including offices, Hermes Real Estate Senior Debt Fund, is targeting more capital than the 15 value added funds combined. The debt fund, managed by UK-based Hermes Real Estate, is targeting £1.5bn to focus on a diversified range of UK property types, including offices.
The majority of office-focused funds in market are targeting the US, with 14 vehicles targeting a total of $4.6bn in capital commitments. This is followed by Asia-Pacific-focused funds, with four vehicles targeting an aggregate of $0.9bn, with the two remaining vehicles targeting $1bn to invest in the European office property market.