Nareit tracks quarterly investment holdings for the largest actively managed real estate investment funds focusing on REIT investment for insights into expert investor sentiment. In the second quarter of 2025, telecommunications had the largest share in actively managed funds as residential lost the top spot for the first time since 2017.
Another quarter of gains in the office sector has put its share in the funds equal to its share in the FTSE Nareit All Equity REITs Index for the first time post-pandemic.
Telecommunications was the most overweight sector relative to its index weight, invested at 136% of its index share, and had the largest annual gain for the quarter. Data centers rebounded with the highest quarterly increase and was the second most overweight sector, invested at 129% of its index share.
Both office and timberlands have seen steady gains through the past year. Office is now equal to its index share, and timberlands is the third most overweight sector invested at 119% of its index share.
The table above shows the share of each equity REIT property sector by assets under management.
- Telecommunications claimed the top spot for allocations at 17%, edging out residential at 16%, which has had the highest allocation every quarter since the second quarter of 2017.
- Health care had the third highest allocation at 15%, followed by data centers at 12%, and retail at 11%.
- Office is no longer in the bottom three and has moved from under 2% a year ago to over 3% in the second quarter of 2025.
- Diversified remained in last place, with less than a 0.01% share.
- Gaming and lodging/resorts round out the bottom three with approximately a 2% share each.
The table and chart above show the change in property sector asset share by quarter and from the previous year.
- Telecommunications had the largest year-over-year gain in weight of 2.8 percentage points and the third largest quarterly gain at 0.8 percentage points.
- After successive quarterly gains since the second half of 2024, health care’s allocation dropped in the second quarter by 0.6 percentage points. However, the previous quarterly gains put the sector up 2 percentage points from the previous year.
- Data centers had the highest quarterly increase at 1.2 percentage points, somewhat covering last quarter’s loss of 2.6 percentage points, leaving the sector with an annual gain of less than 0.1 percentage points.
- Office had the second highest quarterly gain at nearly 1 percentage point and had the third highest annual gain at 1.7 percentage points.
- Industrial has had nine consecutive quarters of reduction, including a drop of 0.9 percentage points in the second quarter. Industrial is down 3.2 percentage points annually.
- Residential had the largest quarterly decline at 1.1 percentage points, giving it the second largest annual decline at 1.9 percentage points.
- Retail has declined in both of the first two quarters of 2025, leaving it down 1.6 percentage points for the year.
- Gaming is down for the fifth consecutive quarter by 0.6 percentage points and down annually by 1.3 percentage points.
The charts and table above compare the weight of the sectors in actively managed funds to the weight of the sectors in the All Equity index.
- Telecommunications remained the property sector with the highest overweight relative to its index share, at 136% in the second quarter. Telecommunications was also the highest overweight in absolute terms, at 4.5 percentage points overweight its index share.
- Data centers were the second highest overweight, at 129% of its index share (2.7 percentage points overweight), with timberland third highest at 119% (0.4 percentage points). Timberland flipped overweight in the last quarter of 2024 and has been increasing its share of funds over the past year.
- Office has jumped to 100% of its index weight, up from under 50% in the second quarter of 2024.
- Residential and health care remained overweight at 109% of their index weights, but both have dropped significantly throughout the year. Residential had a high of 3.5 percentage points overweight in the second quarter of 2024, down to 1.3 percentage points a year later. Health care had a high of 3.2 percentage points overweight in the previous quarter, down to 1.3 percentage points.
- Cuts to retail and industrial have put both sectors strongly underweight. Retail is down to 76% of its index share while industrial is down to 77%.
- Gaming flipped underweight at the end of 2024 and has steadily lost share. The sector is at only 64% of its index share, second only to diversified.
Note that five of the 23 funds had not reported first quarter data for this analysis.
For more information on the active manager project, see Reading the Real Estate Market: Tracking Active Managers’ Allocations Over Time.