Commercial Real Estate as an Asset Class

Annual Review of Financial Economics, Forthcoming

37 Pages Posted: 11 Oct 2019

See all articles by Andra C. Ghent

Andra C. Ghent

University of North Carolina (UNC) at Chapel Hill - Finance Area

Walter Torous

affiliation not provided to SSRN

Rossen I. Valkanov

University of California, San Diego (UCSD) - Rady School of Management

Date Written: October 1, 2019

Abstract

We survey the properties of commercial real estate (CRE) as an asset class. We first illustrate its importance relative to the US economy and to other asset classes. We then discuss CRE ownership patterns over time. While the academic literature has emphasized Real Estate Investment Trusts (REITs), about two thirds of CRE is owner-occupied. We next study the return properties of CRE indices, indices on particular property types, and discuss what is known about the returns to individual properties. We briefly discuss CRE debt before turning to property derivatives. Finally, we consider how including CRE in a portfolio affects the portfolio's performance.

Keywords: Commercial Real Estate, Corporate Real Estate, Property Returns, REITs, Portfolio Diversification

JEL Classification: G11, G12, R33

Suggested Citation

Ghent, Andra C. and Torous, Walter and Valkanov, Rossen, Commercial Real Estate as an Asset Class (October 1, 2019). Annual Review of Financial Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3462599

Andra C. Ghent

University of North Carolina (UNC) at Chapel Hill - Finance Area ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

Walter Torous

affiliation not provided to SSRN

Rossen Valkanov (Contact Author)

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States
858-534-0898 (Phone)

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