Property types, strategy to determine real estate performance

How real estate investors react to changes to the asset class caused by the pandemic and recession will depend on what the portfolio is designed to do for their overall portfolios, industry experts say.

A great deal depends on a variety of factors, including property type and strategy, said Taylor Mammen, Los Angeles-based senior managing director at real estate consulting firm RCLCO Real Estate Advisors.

"Multifamily and industrial and niche sectors that benefit from the digital economy are absolutely in vogue and for good, rational reasons," he said.

What happens to office properties in a post-pandemic world is the "million-dollar question," said Indraneel Karlekar, global head of research and strategy at Principal Real Estate Investors, which manages $78.6 billion in real estate assets.

"There's so many conflicting views on office," he said. Even so, rent collections have remained quite high — averaging around 86%, according to NCREIF open end fund index data, Mr. Karlekar noted. That is possibly because office leases run longer than other property types, he said.

Even so, retail properties that have even longer leases witnessed rent collections of 35% and 45%, Mr. Karlekar said.

"It shows the difference in fortunes of different property types," he said.