Office-Focused Private Real Estate Funds in Market – February 2014

by Jack Jackson

  • 10 Feb 2014
  • RE

There are currently 28 private real estate funds in market with a primary focus on office property, which are collectively targeting $11.2bn in capital commitments from investors. In the past decade, office-focused real estate funds have raised over $45bn, with nearly $30bn raised since 2007, showing there is strong investor appetite for exposure to office property. As of February 2014, the largest office-focused real estate fund in market is Shorenstein Realty Investors Eleven, a core-plus vehicle targeting $1.5bn in capital.

Fundraising for office-focused private real estate funds has remained roughly constant over the last few years, with an average of $235mn raised per fund since 2011, but still pales in comparison to 2007 and 2008 before the global economic crisis, where $500mn was being raised per fund. Less capital was raised in 2013 than in 2012 ($2.2bn against $4.6bn respectively), but there were over double the number of funds holding a final close in 2013 (21 against 9 respectively). This suggests that investor appetite remains relatively constant and fund managers are realistic as to how much they can raise for their office-focused funds. 

Geographically, North America is the primary focus of most funds in market, with 18 primarily North America-focused funds targeting a total of $7.7bn in capital commitments. This is followed by the Asia-Pacific region, with $2.4bn targeted through six funds, and four Europe-focused funds currently targeting an aggregate $1bn. In terms of strategy, there are currently 11 primarily value added vehicles targeting $4bn, six core-plus vehicles targeting $3.8bn and five core vehicles targeting $900mn. Opportunistic and debt vehicles are collectively targeting $2.5bn through six vehicles. 

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