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CRE distressed fundraising falls as pricing and competition improve
Avison Young data show fundraising for distressed or opportunistic strategies fell 38.0% in 2023 to $51.9 billion, and slid 65.0% in 2025 to $20.9 billion.
Commercial Observer reports that a wave of capital targeting distressed commercial real estate strategies has not materialized as widely expected, according to a national capital markets brief from Avison Young.
The report attributes the slowdown to higher-for-longer borrowing sentiment and stronger competition that has pushed pricing and yields more in borrowers favor, even as year-over-year transaction volume for distressed assets has risen.
Avison Young data shared with Commercial Observer show fundraising allocated to distressed or opportunistic strategies dropped 38.0% in 2023 to $51.9 billion from $83.5 billion in 2022, then declined again 65.0% in 2025 to $20.9 billion after a partial uptick to $59.7 billion in 2024.
Despite a rebound in 2026 so far, with $26.0 billion raised in the first half, the figures remain far below the 2022 peak, while the report notes value-add strategies have drawn the most capital in 2026 at $66.9 billion after $34.7 billion in 2025, according to the same dataset.