Commercial Real Estate as an Asset Class

We survey the properties of commercial real estate (CRE) as an asset class. We first illustrate its importance relative to the US economy and to other asset classes. We then discuss CRE ownership patterns over time. While the academic literature has emphasized Real Estate Investment Trusts, about tw...

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Bibliographic Details
Published in:	Annual review of financial economics Vol. 11; no. 1; pp. 153 - 171
Main Authors:	Ghent, Andra C, Torous, Walter N, Valkanov, Rossen I
Format:	Journal Article
Language:	English
Published:	Annual Reviews 01-11-2019
Subjects:	commercial real estate corporate real estate JEL G11 JEL G12 JEL R33 portfolio diversification property returns REITs
Online Access:	Get full text
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Summary:	We survey the properties of commercial real estate (CRE) as an asset class. We first illustrate its importance relative to the US economy and to other asset classes. We then discuss CRE ownership patterns over time. While the academic literature has emphasized Real Estate Investment Trusts, about two-thirds of the value of CRE is owner occupied. We next study the return properties of CRE indices and discuss what is known about the returns to individual properties. We briefly discuss CRE debt before turning to property derivatives. Finally, we consider how including CRE in a portfolio affects the portfolio's performance.
ISSN:	1941-1367 1941-1375
DOI:	10.1146/annurev-financial-110118-123121