Commercial real estate developers and investors are finding a dearth of places to turn for capital as lenders of all shades retreat and fundraising plummets.

Only $28.2B of loans converted into commercial mortgage-backed securities have been issued so far this year, the lowest figure since 2011, according to Trepp data reported by The Wall Street Journal. About $89B in commercial property was purchased in the third quarter, down 53% year-over-year, per MSCI Real Assets.

"Capital is scarce and backbreakingly expensive," Vornado Realty Trust CEO Steven Roth said Tuesday on the company's third-quarter earnings call.

The borrowing environment has been bleak since the Federal Reserve began raising interest rates more than a year ago. Loan volumes and property sales have fallen dramatically as banks, insurance companies and other commercial property lenders continue to cut back.

Scarcity of capital is also keeping dirt from turning. According to Dodge Construction Network, only 935M SF of construction projects are expected to begin this year, a 17% decline annually and the most significant drop since 2009.

“Capital market malaise is crushing everybody,” Crow Holdings CEO Michael Levy told the WSJ.

Real estate fundraising has taken a similar plunge. Just over $18B was raised by 61 funds globally in the third quarter, a 71% decline from the second quarter and the slowest rate of fund closures since the Fed began its interest rate hikes, according to Preqin data reported by Bloomberg.

The situation has yet to devolve into a crisis as severe as that experienced in 2008, James Muhlfeld, managing director at Eastdil Secured, told the WSJ.

Unlike the Global Financial Crisis, there is still some money changing hands, but lenders are more closely scrutinizing borrowers, and higher prices are being charged to hedge risk.

Regional banks have pulled back amid an alarming jump in nonperforming CRE loans, paving the way for debt funds and other alternative lending sources, but even those groups are struggling to raise capital, according to the WSJ.

“There is liquidity available,” Muhlfeld said. “But it’s likely going to be more expensive, with lower leverage and with a different lender.”