Unlocking Alternatives

KEY TAKEAWAYS

• A Dynamic Sector: Since our last report in 2019, the pandemic, inflation and restrictive capital markets space dramatically shifted the landscape of alternative CRE asset types.
• Long- and Short-Term Factors at Play: The rise of remote and hybrid work, and acceleration of family formations during the pandemic, have amplified long-term demand in these sectors. 
• Survivors and Thrivers: Alternative assets have outperformed major assets during the last three economic downturns, suggesting their potential as future safe havens. 
• Resilient to Recent Headwinds: Despite a drop-in transaction activity, certain subsectors have shown resilience and have maintained or expanded overall transaction volume. 
• Runway for Capital: With many asset types operated by non-institutional entities, there is room for increased institutional participation, which could enhance pricing and liquidity, and create a mutually beneficial cycle.  
• Barriers to Entry: Investors should consider operational, regulatory, and industry-specific nuances when managing these properties, which often require suitable acquisition targets or experienced partners.