Earlier this year, in a conversation with a large public pension — the School Employees Retirement System of Ohio — one number stayed with me. Its target allocation to real estate had moved from 13 percent to 7 percent, a shift it has since made public, and the same decision raised infrastructure from 7 percent to 10 percent. That is not a coincidence. Real estate lost this round of a real competition for capital. The question worth asking is not whether that is true. It is whether the capital that left is coming back, and whether infrastructure’s advantage over real estate is something we should expect to last.
What caused the shift
Start with what is cyclical. Since 2022, higher rates have pushed cap rates out, cut property values, dried up distributions and
