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Credit of AZBIGMEDIA. March 31, 2021
“Prior to the pandemic, investors were already expanding their focus and allocation to alternative assets, with the alternatives sectors’ share of overall transaction volume rising to nine percent between 2017 and 2019 versus six percent from 2005 to 2007,” said Matthew Lawton, JLL Capital Markets Co-Head of Investment Sales Advisory Group. “Underpinned by secular and cyclical drivers, many of the alternative asset classes are expected to generate among the highest risk-adjusted returns on a long-term basis of all property types.”
Alternatives, which also include student housing, cold storage and single-family rental, are benefiting from increased investment demand now for a variety of reasons. In the past when the industry faced challenges, investors shifted to the alternatives, but this time might be different.
While some of this demand is accelerated due to the pandemic, there is evidence that it is more than a passing phase. Alternatives, which also include student housing, cold storage and single-family rental, are benefiting from increased investment demand now for a variety of reasons. In the past when the industry faced challenges, investors shifted to the alternatives, but this time might be different. Large institutional investors are increasing allocations, causing more liquidity across the space. Additionally, more established operators are entering the space.
“We are seeing a big uptick with core investors educating themselves and moving capital into the alternatives space as they evolve their portfolio allocation strategy,” said Coleman Benedict, Co-Head of JLL’s Investment Sales Advisory Group. “At the same time, what is tempering their ability to make big strides is the fact that many of these sectors are still quite small in terms of investable stock, yet demonstrating significant rent growth and occupancy demand drivers as disruptive market forces play out.”
Single-Family Rental
In the United States, the single-family rental (SFR) sector comprises 16 million housing units that have traditionally consisted of mom-and-pop investors. Now low inventory and renter demand have fueled a surge of institutional and private investor interest in SFR investments. Rents in institutionally owned portfolios have grown more than three percent on an annualized basis. Additionally, proptech like Roofstock enables investors to manage portfolios in ways that didn’t previously exist.
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