Commercial Real Estate as an Asset Class

Sunday December 1, 2019
  • Article

Abstract

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.

Note: Research papers posted on SSRN, including any findings, may differ from the final version chosen for publication in academic journals.

Citation

Ghent, A., Valkanov, R., and Torous, W. N. (2019) Commercial Real Estate as an Asset Class. Annual Review of Financial Economics, Vol. 11, pp. 153-171, 2019. https://doi.org/10.1146/annurev-financial-110118-123121