Institutional target allocations to real estate remain flat for the first time since 2013

Amidst the backdrop of a tumultuous economy, rising interest rates and frozen transaction markets, institutional target allocations to real estate have remained flat for the first time in 10 years, at 10.8 percent, finds the 11th annual Institutional Real Estate Allocations Monitor, published by Hodes Weill & Associates and Cornell University’s Baker Program in Real Estate. Institutions have chosen to spend 2023 focused on managing their existing portfolios in an environment in which investors are waiting for valuations to find a bottom. While the survey finds that institutions expect to hold target allocations steady in 2024, investors believe the next few years will prove to be good vintage years to capitalize on expected dislocation and distress.

The majority of institutions are at or over target allocations to real estate, with nearly 40 percent of survey respondents reporting overallocation to the asset class by an average of 200 basis points, in compariso