Half-Year Report: Active Property Managers Diversify Portfolios and Enter New Property Sectors

The share of REIT assets in funds for each real estate sector quarterly from 2010 through the first quarter of 2024 is shown in the chart above. Overall, portfolios are more diversified in 2024 than they were in 2010, especially as new sectors have been added. In 2010, the three main sectors, retail, residential, and office, accounted for 63% of fund assets. At the beginning of 2024, the three main sectors, residential, retail, and telecommunications, accounted for just 45% of total assets.

A closer look at sector allocations reveals other key observations:

• Retail had the highest share (26%) in 2010 Q1 and peaked at 30% share in 2016 Q1 before beginning a steady decline and falling below 10% in 2020 at the onset of the pandemic. It began to grow again in 2021 and now stands at 14% of total assets in 2024 Q1.
• The largest share (17%) in Q1 2024 was held by the residential sector, which overtook the retail sector at the beginning of 2017 and is still the sector with the largest share in assets.
• Office’s share of assets was 17% in Q1 2010 and remained in double-digit levels for most of the period before declining to 9% in Q1 2020. Office’s share continued to decline and was 3% in Q1 2024.
• Telecom became a sector in 2012 Q1 with a 0.8% share of assets and currently has the second-highest share with 14% in 2024 Q1. The sector’s growth was sluggish until the pandemic, jumping from 3% of assets in 2018 Q4 to 7% in 2019 Q1 and 12% in 2021 Q1.
• Data center share hovered around 1%-2% until it started growing from 3% in Q3 2015. Now, in Q1 2024, the sector has a 12% share of assets.
• Other sectors, such as healthcare and self-storage, maintained stable shares throughout the period, averaging 10% for healthcare and 7% for self-storage.