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Estimated $26.8 T U.S. CRE investable universe
- Institutional-quality represents $11.7 T (44%).
- Residential sectors control.
- Alternative sectors account for over 30%



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WHY MEASURE THE INVESTABLE UNIVERSE?

The goal of this analysis is to offer investors with a standard for the size and scale of the U.S. business property (CRE) market, specific residential or commercial property sectors and the "institutional" quality part of the marketplace. Up to this point, published price quotes on the size of the business realty investable universe mainly focus on country-level worldwide contrasts, taking a top-down method to estimate the size of the total commercial property market in each area. Existing literature does little to estimate the value of particular residential or commercial property types, let alone alternative residential or commercial property sectors. This report intends to fill this space in the business genuine estate details landscape. Focusing solely on the United States, this report takes a bottom-up method, aggregating estimates for the size of individual commercial realty residential or commercial property types to reach a worth for the overall commercial property market. This technique enables segmentation in between conventional and alternative residential or commercial property types, as well as the ability to estimate the share of "institutional" genuine estate by sector.

Just how big is the U.S. business property market? Although an apparently simple concern, estimating the size of the market is challenging for several reasons: absence of information and transparency (particularly for smaller sized, less-liquid and historically tracked residential or commercial property sectors), the commonly varied nature of the series of investible residential or commercial property types, and inconsistent market definitions/classifications.

This analysis tries to address the concern through a two-step process: initially, estimating the gross possession worth of each residential or commercial property sector no matter ownership, occupancy, period, size, area, and quality. After coming to a price quote for the general size of each sector, the 2nd action is to use filters based upon assumptions for developing class, vintage, size and/or market to further narrow the investable universe to just consist of institutional assets - a subsegment of the investable universe that is restricted to residential or commercial properties that fit the normal criteria of institutional investors.

Sector sizes are approximated using the most trustworthy personal and public data sources for commercial realty readily available, while likewise leveraging the knowledge and insights produced by Clarion and Rosen Consulting Group (RCG)'s experience in the market. For the majority of sectors, the technique to computing the overall worth includes approximating the physical size of the sector, be it square footage, systems, spaces, or beds; and combining this with an estimated value based on recent deal information. Less traditionally tracked residential or commercial property sectors require more presumptions to approximate market-level and still-fluid industry meanings. For residential or commercial property sectors where square video or unit counts were not available, total value was estimated using details from third-party information sources or insights from market individuals.

OUR ESTIMATE OF THE INVESTABLE UNIVERSE

We estimate the overall size of the U.S. CRE investable universe to be $26.8 trillion.

However, from an institutional investor's perspective, this is an overestimate, as it includes residential or commercial properties that fall listed below typical institutional requirements for building size and quality. Similarly, this broad procedure of the CRE universe includes a complete variety of geographies, including markets that are normally too small or insufficiently liquid for institutional investors. As such, we filtered our investable universe value utilizing a precise series of presumptions to create an "institutional" universe quote. These filters vary by residential or commercial property sector and include building location, quality, age and size. Through this method, the overall size of the institutional universe is approximated to be $11.7 trillion. Note, that this is over 10 times the size of the biggest industrial genuine estate index, the NCREIF Residential Or Commercial Property Index, (NPI).

We sector the investable universe into 2 broad classifications: Traditional and Alternative residential or commercial property types.

TRADITIONAL RESIDENTIAL OR COMMERCIAL PROPERTY TYPES MAINTAIN A DOMINANT SHARE

" Traditional" residential or commercial property sectors, which consist of commercial, multifamily, office, retail, and hotels are valued at $16.9 trillion, representing 63% of the investable market. Of this overall, 48%, or $8.2 trillion, is approximated to be of institutional quality. Within the $11.7 trillion institutional universe, traditional sectors then account for near 70% of the overall. With a value of $2.6 trillion, homes are the largest conventional sector, representing more than one-fifth of the institutional universe.

ALTERNATIVE RESIDENTIAL OR COMMERCIAL PROPERTY TYPES ARE A SIGNIFICANT AND RISING COMPONENT

" Alternative" sectors, that include residential or commercial property types that have traditionally not been the predominant focus of institutional financiers, account for the remaining 37% ($ 9.9 trillion) of the investable universe and $3.6 trillion, or 31%, of the institutional universe. The alternative subsegment of the CRE universe consists of the residential or commercial property types shown below. Many have been veteran gamers in the alternative sectors, but non-REIT financial investment has traditionally been limited. However, alternatives are an increasing share of institutional-investor portfolios.

There are three recognizable groupings within the options subset of the institutional market:

THE RESIDENTIAL SECTOR IS THE LARGEST COMPONENT

The residential options grouping (inclusive of single-family rentals, trainee housing, age-restricted housing, and made housing) is valued at $2 trillion, or 17% of the institutional universe. Within this group, the single-family rental sector (with 3.9 million houses) has the largest approximated worth ($ 1.3 T), accounting for 11.5% of the institutional universe. The trainee housing sector is the next largest housing sector within the group, consisted of 2.4 million beds with an appraisal of $277B, followed by age-restricted housing at $251B and manufactured housing at $165B. Combining the property options grouping with traditional apartment or condos leads to the combined appraisal of $4.7 trillion, making housing in a more comprehensive sense account for the lion's share (40%) of the institutional universe.

INDUSTRIAL AND ADJACENT SECTORS

Comprised of commercial outdoor storage (IOS) and cold storage warehousing, the industrial-adjacent group is valued at $187B, totaling up to 1.6% of the institutional universe. Combining this group with the conventional industrial market results in a value of $1.5 trillion, or 13.1%, of the institutional universe.

HEALTHCARE SECTOR

The health care residential or commercial property types: life sciences, medical workplace, and elders housing, have a combined estimated institutional worth of $839B, corresponding to 7.2% of the institutional universe. With a value of $413B, medical workplace accounts for close to half of the value of the combined healthcare sector, followed by senior housing ($ 302B) and life sciences ($ 125B).

AN EVOLVING CRE LANDSCAPE

The CRE investment landscape is progressing quickly. Certain traditional sectors, such as workplace and retail, have actually faced structural challenges in the last years, decreasing their total share of the investable universe by worth; meanwhile, many alternative sectors have actually seen values increase considerably due to strong occupant and investor cravings. As an outcome, the share of capital streaming into the alternative sectors has increased considerably. Investments in alternative CRE sectors amounted to $14.2 B in deal volume over the past four quarters, accounting for 16% of overall CRE volume, well above the share since 2014 of 13%, according to MSCI Real Capital Analytics.

Institutional financier interest in the alternative sectors has actually grown as well. The alternative sector share of the NCREIF Open-End Diversified Core Equity Index (ODCE) has increased from around 4% in 2017 to 12.9% since 2024 Q2, led by financial investments in self-storage and life sciences - the largest alternative residential or commercial property sectors in the ODCE portfolio.