Juniper Square, the provider of partnership enablement for the private funds industry, released a report tracking shifts in commercial real estate (CRE) investments “by property type over the past decade, as well as trends in transaction volumes, acquisitions, fundraising and more.”
The 2022 CRE Market Pulse report shows “a dramatic shift in GP portfolio allocations over the past 10 years, with industrial’s share of holdings rising by nearly 14%, while office and hotels’ combined share declined by nearly 12%, driven in large part by the impact that digital technology has had on how we shop, live, and work.”
Industrial gains share “at the expense of office and hotel.”
Driven by the rise of e-commerce, the share of industrial land and properties “in GP portfolios has grown from less than 4% to nearly 18% since 2013.”
The pandemic “exposed fragility in global supply chains, accelerating industrial demand, with transaction volume increasing 70% from 2020 – 2022.”
The ability “to meet virtually and work from home has decreased demand for office space and hotels, resulting in the share of office and hotel properties in GP portfolios decreasing from more than one-in-three properties to just over one-in-five since 2013.”
The market for office buildings froze “due to the pandemic-driven increase in cloud-based work, with transaction volumes for office buildings declining by 87% from 2020 – 2022.”
Changes in interest rates “shifted investor preferences for risk.”
In 2022, new funds raised “were biased towards less risky investments with near-term income.”
Core plus funds’ share of new funds raised in the year “increased by 11% year-on-year.”
Opportunistic funds’ share of new funds “declined by 14% year-on-year.”
Matt Lawson, CMO at Juniper Square, said:
“Investments in commercial real estate are reflective of how people in America shop, live, and work. And as digital commerce and remote work reshape these patterns, they also reshape the types of building sponsors choose for investment. Our inaugural CRE Market Pulse puts a fine point on these trends, with insights and data aggregated from real-world private investments managed on the Juniper Square platform.”
The full report, including additional data points, is available here.
Juniper Square’s CRE Market Pulse report was “generated by aggregating and anonymizing partnership data across more than 650 private partnerships and 6,300 properties.”
As noted in the update, Juniper Square claims it is “the leader in partnership enablement for the private funds industry, offering a universal system for GPs and their LPs to seamlessly connect and communicate across every stage of their partnerships.”
Juniper Square “empowers investment managers to accelerate fundraising, scale operations efficiently, and improve investor satisfaction.”
More than 1,800 GPs rely on Juniper Square “to manage more than 32,000 investment entities that span over 500,000 LPs and $700 billion in investor equity.”