Accelerating Alternative Property Types: Insights from Deloitte

The National Association of Real Estate Investment Trusts (NAREIT) released information about a recent Deloitte report on the rise of alternative property types, stating that upcoming changes in corporate leadership could accelerate this trend. According to a guest on NAREIT's REIT Report podcast, Deloitte's national real estate funds co-leader Mark Wojteczko, the emergence of alternative property types is expected to accelerate, driven by demographic trends and sector fundamentals. Wojteczko emphasized the significance of alternative property types, such as data centers, cell towers, life sciences, and senior living, which have generally outperformed traditional property types over the past decade.

Key Takeaways:

• Alternative property types are expected to continue outperforming traditional property types, with about 11% to 12% annualized returns over the past decade, compared to 6% for traditional property types.
• The emergence of alternative property types is anticipated to accelerate in the future, driven by demographic trends and sector fundamentals.
• Data centers, cell towers, life sciences, and senior living are critical sectors in the growth of commercial real estate.
• Younger executives, including next-gen leaders, are expected to play a significant role in driving the growth of alternative property types.
• The appetite for alternative property types among younger executives is significant, and this trend is being closely monitored by Deloitte.
• Corporate leadership changes are expected to further accelerate the growth of alternative property types over the next decade.

Statistics:

• Alternative property types have generally outperformed traditional property types over the past decade, with about 11% to 12% annualized returns.
• Traditional property types have achieved about 6% annualized returns over the past decade.
• About 12% of executives surveyed expect to see significant changes in their organization's business model in the next 3-12 months, with 18% anticipating changes in less than 3 years (Source: Deloitte).
• 70% of CEOs and board members surveyed believe that climate change will have a significant impact on the industry in the next 3 years (Source: Deloitte).
• About 40% of executives plan to increase their focus on sustainability in the next 3 years (Source: Deloitte).

Sources:

• National Association of Real Estate Investment Trusts (NAREIT)
• REIT Report podcast
• Deloitte (report and survey data)