Institutional investors, including pension funds, are stepping outside the box, beyond the core asset types of office, industrial, retail and apartments, to consider a growing menu of alternative real estate options.
Alternative property types have already exploded in the publicly traded market. About 40 percent of the market cap of REITs is now held in non-traditional property sectors, including self-storage, student housing and resorts, says Greg MacKinnon, , director of research at the Pension Real Estate Association (PREA) in Hartford, Conn. “It is just now starting to slowly get a grip in the private market as well,” says MacKinnon.
There has been a noticeable spike in pension fund interest in non-traditional property types over the past few years. “How much that interest is translating into actual increased investment is still up in the air a little bit,” MacKinnon notes.