- September 2008: Vol. 20 No. 9

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How to Outrun the Bear: Investors Who Add Value Have a Better Chance

by John Bellack

It is a familiar story:

Two guys are hiking in the woods. A grizzly bear appears threatening on the path. The first guy calmly sits down and replaces his hiking boots with running shoes. “What are you doing?” asks the second guy, “Don’t you know that you can’t outrun a bear?” “I know that,” the first guy responds, “I just need to outrun you.”

The analogy works for real estate investment strategy when facing a bearish economic outlook. Property-specific investment performance is increasingly measured relative to the NCREIF National Property Index or subindexes. Outperforming the index has become the key criterion for the financial success of investment funds.

Real estate has earned its place in institutional portfolio allocations as a result of its strong relative performance and low volatility. The healthy performance has been aided by an extraordinarily long economic expansionary period. As managers of an asset class characterized b

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