While real estate is the third-largest asset class in the United States, defined contribution (DC) retirement plans currently hold only a small fraction of their assets in private real estate, relying primarily on public REITs. In contrast, defined benefit (DB) plans and other institutional investors allocate most of their real estate exposure to private holdings. DC plans currently hold a small portion of their assets in private real estate, not due to a lack of interest, but primarily because of perceived operational challenges.
“Ease of implementation is really what has caused that huge disparity between DB and DC,” says Tripp Braillard, head of DC distribution at Clarion.
If DC plans were to increase their allocations to private real estate meaningfully, the effects would reshape the broader industry. DC plans currently hold an estimated $12 trillion to $13 trillion in assets, accounting for nearly a quarter of the roughly $44 trillion in total U.S. retirement
