The Rise of Alternative Property Sectors in the U.S.

Michael Acton, Head of Research at AEW, explains which factors and trends drive the growing interest of institutional investors in the alternative property sectors in the U.S.

  • Michael Acton, CFA®, Head of Research at AEW Capital Management in North America, addresses the rise of alternative property sectors in the US Commercial Real Estate space
  • Definition of what embraces the US Core sector is changing rapidly.
  • There has been a growing interest among US institutional investors in the Alternative Property sector and a rising allocation to this subset of the larger property sector in their portfolios over the last decades.
  • Some property sectors such as cold storage, senior housing or medical property benefit from strong tailwinds, supported by consumer preference, social or demographic changes. These trends result in changes in the property offering (services, operational intensity) which may translate into higher rents from tenants.
  • Alternative Property sectors exhibit various revenue trajectory, places in the cycle, outlook (uncertainty, predictability of income streams) and risk-adjusted opportunity profiles.
  • While representing about half of the market capitalization of the listed Real Estate market in the US, the alternative property sector makes up for a small percentage of the private market but Real Estate private market is catching up with public market. Covid has accelerated a trend that was already in place before the pandemic.
AEW Capital Management, L.P.
Delaware limited partnership.
Two Seaport Lane
Boston, MA 02210-2021 USA

Natixis Investment Managers
RCS Paris 453 952 681
Share Capital: €178 251 690
43 avenue Pierre Mendès France
75013 Paris

This communication is for information only and is intended for investment service providers or other Professional Clients. The analyses and opinions referenced herein represent the subjective views of the author as referenced unless stated otherwise and are subject to change. There can be no assurance that developments will transpire as may be forecasted in this material.

Copyright © 2022 Natixis Investment Managers S.A. – All rights reserved