Mike Acton, head of research and strategy for North America at global real estate asset manager AEW, joined the latest episode of the REIT Report. He discussed why commercial real estate provides an anchor amid today’s tech-driven market boom, how many smaller and retail investors are under-allocated to the sector, and why now could be the best entry point in a decade for real estate investment.
Acton noted that the largest, most sophisticated institutional investors typically have real estate allocations that are anywhere from 10% to 15% of their portfolio. Within that real estate allocation, 10% to 20% might be in the listed space.
“There's a lot of evidence that the leading investors are doing something very different than what a lot of smaller investors, certainly what a lot of retail investors, are not doing and probably should be,” Acton said.
Elsewhere, Acton discussed how the current real estate cycle marks the first time commercial property values in the United States have gone down on a sustained basis without there being an accompanying economic recession. “As we look forward, I think this next cycle has a chance to be a longer cycle because we're not going to be getting the same supply response, at least not in the next couple of years,” he noted.
Meanwhile, Acton said that with property yields at their highest level in at least a decade, now is an opportune time to invest in real estate.