Sara Ingersoll, SVP, Investment Product Manager at Inland Securities Corporation, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss the growing institutional allocations to alternative sectors of commercial real estate.
Senior housing, student housing, medical offices, build-to-rent communities, and self-storage are alternative sectors of the commercial real estate (CRE) market supported by strong demographic trends. These property types have different return drivers than the traditional sectors of office, retail, industrial, and multi-family residential. Traditional sectors may be driven more by cyclical money flows, while alternative property types benefit from demographic trends. The alternative sectors tend to be less volatile, more resilient across the business cycle, and have a historical track record of outperforming returns of the core sectors.
The NCREIF Open-End Diversified Core Equity (ODCE) Index tracks institutional real estate funds. Ingersoll notes that the weight on these alternative property types has grown from 1% to 14% of the ODCE Index over the last decade. Inland has been an innovator in this space, allocating over $6 billion to alternative property types, providing deep experience to operators, managers, and investors in these sectors.
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