The investment climate is less uncertain than it was one year ago, but it’s no less pessimistic. Real estate remains one of the least attractive asset classes on a risk-adjusted basis, and the consensus among investors is that the sector will continue to face multiple challenges through 2010. And yet, there seem to be no hard feelings about the downturn among the surveyed investors. They continue to allocate capital to the asset class with the expectation that real estate will be the steady income-producing investment and portfolio diversifier it was always meant to be.

Although the market outlook for 2010 isn’t good, plan sponsors — surveyed by Institutional Real Estate, Inc. and San Francisco–based research firm Kingsley Associates — say they feel much more comfortable about the investment environment, compared with la