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Real estate

Allocations in Private and Listed Real Estate Markets Show Significant Divergence

Strategic Insights

— 2 min read

The investment allocations of NCREIF's Open End Diversified Core Equity fund (ODCE funds) have significantly diverged from those of listed real estate, even accounting for the large allocation to the four traditional sectors of apartment, office, retail, and industrial. The private real estate market, as proxied by ODCE funds, has continued to keep allocations to office relatively high while decreasing allocations to retail, in sharp contrast to listed real estate, which has seen large decreases in office and varied allocations to retail.

Key Takeaways:

  • The private real estate market, as represented by ODCE funds, has a 90% share in traditional sectors, compared to 39% for FTSE Nareit and 31% for active managers in the second quarter of 2025.
  • ODCE funds have continued to keep allocations to office relatively high, while decreasing allocations to retail, in contrast to listed real estate, which has seen large decreases in office and varied allocations to retail.
  • The chart above shows that the shares of the index and active managers are similar for each property sector, but ODCE's allocations are substantially different, with industrial at a 35% share, retail at 8% share, and office at 17% share.
  • Over the past decade, ODCE's allocations to non-traditional sectors have grown from 5% in 2015 to 10% in the second quarter of 2025, while active managers' share in non-traditional sectors grew from 33% in 2015 to 69% in 2025.
  • The REIT index and active managers have significantly lower allocations to traditional property sectors than ODCE funds, with office declining in all three series, with ODCE funds reducing their exposure by more than 50%, active managers' allocation declined by more than 80% and the index allocation fell by 70%.
  • Apartment allocations trended differently among the series, with ODCE seeing a small steady rise from 25% in 2015 to 28% in 2025, while active managers were underweight the sector and the index share held steady until 2024.
  • Industrial saw steady growth through the pandemic for all three series, with ODCE's exposure nearly tripling, from 13% to 35% over the period.
  • Retail allocations were quite different for private versus listed benchmarks, with retail being the smallest share of the four traditional sectors for ODCE, while it is the largest for FTSE Nareit and active managers.

Statistics:

  • ODCE funds' traditional sector allocation: 90% in 2025 (vs. 39% for FTSE Nareit and 31% for active managers)
  • ODCE funds' office allocation: 17% in 2025 (vs. 10% for FTSE Nareit and 9% for active managers)
  • ODCE funds' retail allocation: 8% in 2025 (vs. 15% for FTSE Nareit and 11% for active managers)
  • Active managers' non-traditional sector allocation: 69% in 2025 (vs. 33% in 2015)
  • ODCE funds' industrial allocation: 35% in 2025 (vs. 13% in 2015)
  • Apartment allocations: ODCE 28% in 2025 (vs. 25% in 2015), active managers 7% in 2025 (vs. 14% in 2015), FTSE Nareit 9% in 2025 (vs. 11% in 2020)

Sources:

  • National Association of Real Estate Investment Trusts (NAREIT) - "Investment Allocations in Private and Listed Real Estate Markets Show Significant Divergence"
  • FTSE Nareit All Equity REITs Index
  • NCREIF's Open End Diversified Core Equity fund (ODCE funds)
  • Active manager tracker published by Nareit

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