Why I’m Not Celebrating the 2015 Fundraising Boom

$627 Million.

That was the average size of a fund close in 2015, a record high for private equity real estate. Yet, for me, the astonishing numbers mask a troubling trend—emerging managers are getting an increasingly smaller share of the pie.

Recently released numbers from Preqin show that from Jan. 1, 2015 through Oct. 20, 2015, only 12 percent of capital allocated to real estate funds went to emerging managers, the lowest proportion since 2007.

Pair that shocking statistic with the fact that 45 percent of the $107B real estate capital raised in 2015 went to just 10 real estate funds and it raises vital questions about the future health—and growth—of the private equity real estate industry.

By limiting the development of new GPs entering commercial real estate, investors are only limiting their investment choices in the long-term.

At PrivcapRE, we’ve recently written about the mistakes emerging managers often make in trying to raise commingled funds, and how first and second-time fund managers often overlook their back office staffing needs when trying to raise LP capital.