Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}

ODCE Fund Allocations To Multifamily On The Rise

Sam Tenenbaum • 9/12/2022

Noteworthy highlights:  

  • Office: Allocation to office real estate is declining quickly. With the prospect of remote work and a potential looming recession or economic slowdown, the macro outlook for the office sector remains cloudy. There will be some bright spots, but the uncertainty has core investors putting their dollars into other asset classes.  
  • Retail: Despite posting the best risk-adjusted returns over more than 40 years, retail has been on a long-run secular decline, ceding ground to industrial. The sector is also bifurcated; malls and power centers are more exposed to the rising threat of e-commerce compared to neighborhood and strip centers, which continue to perform well.  
  • Industrial: Industrial’s performance has caught the attention of institutional investors, overtaking all other asset classes to be the dominant property type in ODCE funds. Today, industrial represents nearly 35% of all ODCE fund allocations, up significantly from 2015 levels, where it was less than 15%.  
  • Apartment: Multifamily remains a steady component of ODCE funds, but as allocations to office and retail fall, core investors are placing more of that capital into multifamily. For much of the past decade, multifamily made up about 25% of ODCE portfolios, but that is quickly approaching 30%, a mark it will likely reach around the end of the year or early next year. 

Why do these trends matter? 

  • As institutional investors place capital, they are increasingly devoting investment dollars to asset classes with strong tailwinds: multifamily and industrial.  
  • While capital continues to chase industrial, the story is more nuanced and asset-specific than multifamily. There can be major NOI pops with shorter-term leases, especially in high-growth markets, but that’s not the case for every asset.  
  • With industrial more exposed to the real economy and a slowdown in demand for goods, we may see allocations to multifamily increase in the months to come.  
    • This is already occurring: multifamily has represented more than 45% of all sales volume year-to-date. 

 

ODCE-Allocations

author / contact

 

sam tenenbaum
Sam Tenenbaum is Cushman & Wakefield’s Head of Multifamily Insights. In this series, he shares unique perspectives on today’s multifamily market, gathered from Cushman & Wakefield’s unique data on the lending environment, strong capital markets presence and the 175,000 units that we manage across the U.S. 

Multifamily Capabilities
Our Multifamily advisors help supercharge your portfolio, beyond the typical “where, why, and how” of investing in and managing multi-unit properties.
Learn more

Related Insights

atlanta bright side
Article

The Bright Side: Finding Opportunity in Atlanta’s Office Market

Interest in Atlanta’s top-tier buildings outpaces leasing in the remainder of the inventory. Tenants are rightsizing and opting for space within the highest quality buildings with access to amenities even if it comes at a pricing premium.
Audrey Giguere • 9/25/2023
Update Occipier
Research

European Logistics & Industrial Occupier Activity

Availability of appropriate logistics and industrial space remains constrained despite marginal increases in availability rates in some markets.
Sally Bruer • 9/25/2023
San Francisco Bright Insight Report
Article

Legal Leasing Continues as San Francisco Law Firms Take Advantage of Soft Market Fundamentals

In San Francisco, one of the United States major legal markets, law firm tenants are capitalizing on a tenant-friendly market characterized by soft market fundamentals, increased concessions and the availability of prime locations in vibrant areas of the city.
Matt Hart • 9/21/2023
Above the clouds (image)
Podcast • Economy

C&W: Behind the Numbers

Our experts cut through the noise to provide you concise commentary on only the most important economic and sector-specific commercial real estate data points.
9/21/2023
energy star certification
Article • Sustainability / ESG

​​The Energy Star Portfolio Manager: Helping Buildings Meet New Performance Standards​

Forget gasoline-fueled, tanked-up automobiles. America’s real energy guzzlers are buildings—both commercial and residential—which account for one-third of all greenhouse gas emissions every year.
Jack Pufunt • 9/20/2023
Labratory
Article

Energy and Resource Efficiency in Life Sciences Design

Energy- and resource-efficient design can help transform corporate goals for existing life sciences buildings into successful, energy-efficient spaces.
Jason D'Orlando • 9/20/2023
Manufacturing Resurgence
Research

U.S. Manufacturing Resurgence?

Disruptions to supply chains across the world have been the norm over the past three years, bringing the impacts of globalization and the importance of well-functioning supply chains into sharper focus.
David Smith • 9/18/2023
reasons-for-move-out-web-card-v2
Article

Sky-High Mortgage Rates Benefitting Multifamily

With mortgage rates approaching 7%, we wanted to see the material impact of the movement in the market. Using data from Cushman & Wakefield Asset Services, which looks at the self-identified reasons that renters are moving out, we’ve laid out the share of renters that have said they were moving out of our managed communities to buy a home, condo, or townhouse.
Sam Tenenbaum • 9/28/2022
odce-fund-allocation-web-card-v2
Article

ODCE Fund Allocations To Multifamily On The Rise

Here, we look at data on the flow of core institutional capital across asset classes. The data comes from NCREIF’s ODCE index.
Sam Tenenbaum • 9/12/2022
internal-ltvs-web-card-v2
Article

Multifamily Loan-to-Values (LTVs) are Lowest in CRE Today Investors Retreating To Lower LTVs

The volatility in the market has investors adopting a risk-off approach. It’s no secret that in today’s choppy market, buyers have been forced to bring more equity to the table. But this market is unique in modern history: at no point since the early 2000s have LTVs been as low as they’ve been this year.
Sam Tenenbaum • 8/29/2022
btr-starts-web-card-v2
Article

Housing Starts Down But Single Family for Rent and Built-to-Rent Remain Strong

The Census recently released second quarter starts data, and as expected, we continue to see a pullback in the single-family market. Overall housing starts continue to decline with single-family starts back to 2019 levels.
Sam Tenenbaum • 8/22/2022
APAC Sustainability ESG Hub main card
Research • Sustainability / ESG

Asia Pacific Sustainability & ESG Hub

Sustainability has become not only a priority, but a mandate for many companies. As one of the top global real estate services providers, Cushman & Wakefield is leading the way in Asia Pacific to drive responsible business practices in the property industry.
Natalie Craig

Interested in learning more?

Get in touch and we can assist with any additional information you need.

With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on  Cookies

More Options
Agree and Close
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS