Institutional investors are increasing their appetite for commercial real estate as they increase their real estate allocations versus other asset classes. They also continue to pour money into the San Francisco Bay Area, making it one of the top investment geographies in the world.
Pension funds, private equity, insurance companies, sovereign wealth funds and other institutional investors around the world want real estate to account for an average of 9.7 percent of fund assets, up from an average of 9.1 percent in 2011, according to a recent report by Preqin, a firm that tracks the alternative asset industry.
But investors still have a long way to go before they meet those targets. On average, real estate makes up only about 7.6 percent of fund assets today, an increase of 90 basis points from 2011.
Recent transactions indicate that a decent chunk of those allocated dollars are flowing into the Bay Area, which is already enjoying one of most active sales periods in recent history...
Despite the market’s booming economy, some investment experts are beginning to wonder if San Francisco’s real estate market is approaching a top. Robert Stamm, an executive managing director with the cross border investment division of Savills Studley in Orange County, a niche investment advisory for international clients, said that his group had become a little hesitant about pursuing deals in San Francisco, particularly in the office sector.Investors Ramp Up Real Estate Allocations and Eye Bay Area Real Estate
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New York City Office Sector Report (Q3 2014)