Like many aspects of the commercial real estate investment market, raising capital has changed dramatically due to the pandemic and social distancing. The standards like zoom calls and virtual tools have helped fund managers find ways to keep working and collaborating with investors during the pandemic. These tools have helped investors conveniently place capital without physical tours or face-to-face meetings. Nevertheless, the capital-raising process looks very different today than at the beginning of the year.
“Overall, the fundraising market is very different after the pandemic. Zoom calls have, of course, taken the place of personal meetings. Drawing a new manager through Zoom is a challenge for investors. " Khalif Edwards, Managing Director and Head of Capital Raising and Investor Relations City viewtells GlobeSt.com. "However, we continue to have Zoom calls with investors to share our thoughts on the market, hear what is important to them, and discuss possible opportunities that might arise from it."
In terms of asset classes, most investors are open to raising capital for multi-family and industrial assets that have performed best through the pandemic. "There's one general topic that apartment buildings and industry are high on their list," says Edwards. “There's also some interest in niche strategies like data centers and life sciences. While there is still market uncertainty, investors know the importance of vintage diversification and capital will be invested in 2020. "
Investors have felt comfortable in this new environment, but most have invested capital in funds with existing relationships and partners rather than new relationships or funds. For investors willing to build new relationships, the barrier is higher. “Much of this capital goes to existing managers who have a proven track record, especially when investing through a downturn,” says Edwards. "That's not to say that investors won't invest in new relationships, but a lot of these conversations started before COVID and some level of convenience has developed. With zoom and conference calls, you can cross the finish line for deals, but commitments will be difficult from new conversations after COVID. "