Real Estate Executives Favor Industrial, Infrastructure, Multifamily Sectors in 2017

Commercial real estate executives are upbeat on industrial, infrastructure and multifamily asset classes for 2017, according to the 2017 Real Confidence Executive Index from Altus Group, in partnership with NAREIT and the National Council of Real Estate Investment Fiduciaries (NCREIF).

The Real Confidence Executive Index survey polled senior executives on how they would each allocate a theoretical $1 billion in commercial real estate investments to get the best returns for 2017. The Real Confidence Executive Index is based on these allocations and represents a total theoretical investment of $65 billion in a variety of commercial real estate investment opportunities.

“The Real Confidence Executive Index survey offers perspective on the economic and marketplace factors that will shape our industry from the decision-makers who are leading it,” said Steve Wechsler, president and CEO of NAREIT.

The industrial sector took the top spot as the preferred asset type for investment, with a 40 percent year-over-year allocation increase in private equity selections and a 61 percent increase in REIT selections.

Richard Kalvoda, executive vice president at Altus Group, said the survey “suggests strong confidence that the industrial market will continue to outperform as demand drivers remain robust.” The industrial sector was the top performing Equity REIT market segment in 2016 with a 30.72 percent total return for the year. 

Multifamily was the second investment choice among respondents for both private equity and REITs. The year-over-year allocation increase was minimal for REITs, but 27 percent higher for private equity.

Meanwhile, allocations to the infrastructure sector grew by 216 percent from the 2016 survey.

This year’s index allocation saw 43 percent of the total capital allocated to private equity and 30 percent to REITs. Private debt received a 20 percent allocation, while public debt received a 7 percent allocation.

The survey was conducted in November and December.