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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. 



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. 

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