By Richard Sarkis
Prior to the 1980s, commercial real estate (CRE) assets were rarely prioritized by institutional investors—entities that hire financial professionals to manage pooled investment funds. CRE did become slightly more popular during the ’80s and ’90s, but it never accounted for more than four percent of institutional investors’ aggregate portfolio until 2000.
And while bonds and equities continue to dominate most portfolios, a number of institutional investors have carved out a non-insubstantial niche for CRE assets in the 21st century.
In 2010, CRE accounted for 5.6 percent of institutional investors’ aggregate portfolio. In 2013, it accounted for 8.8 percent of the portfolio. And in 2015, it accounted for 9.6 percent of the portfolio. Considering that institutional investors in the United States control over $25 trillion—roughly 17 percent of all domestic financial assets—CRE’s portfolio share is nothing at which to balk.
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