At the same time, substantial liquidity remains on the side-lines. Dry powder for commercial real estate totalled $394 billion as of August 2024. The question for investors is how and where that pent-up demand will enter the market.

Some capital is already being deployed into higher-yielding strategies, having been accumulated during the previous cycle. Private credit funds, for example, have been especially active in the past 18 months. As of August, 14% of dry powder globally was targeted at debt strategies, down from as much as 21% in 2018.*