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1 The U.S. Commercial Real Estate Investable Universe

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Estimated $26.8 T U.S. CRE investable universe
- Institutional-quality represents $11.7 T (44%).
- Residential sectors control.
- Alternative sectors account for over 30%

WHY MEASURE THE INVESTABLE UNIVERSE?

The objective of this analysis is to provide financiers with a standard for the size and scale of the U.S. business property (CRE) market, private residential or commercial property sectors and the "institutional" quality part of the marketplace. Up to this point, released estimates on the size of the industrial property investable universe mainly focus on country-level global contrasts, taking a top-down technique to estimate the size of the overall business realty market in each region. Existing literature does little to estimate the worth of particular residential or commercial property types, let alone alternative residential or commercial property sectors. This report aims to fill this gap in the industrial realty information landscape. Focusing exclusively on the United States, this report takes a bottom-up method, aggregating quotes for the size of specific commercial genuine estate residential or commercial property types to arrive at a value for the total business genuine estate market. This approach permits division in between standard and alternative residential or commercial property types, in addition to the ability to estimate the share of "institutional" realty by sector.

Just how big is the U.S. commercial genuine estate market? Although an apparently uncomplicated concern, estimating the size of the market is challenging for several reasons: absence of data and openness (especially for smaller sized, less-liquid and historically tracked residential or commercial property sectors), the extensively diverse nature of the series of investible residential or commercial property types, and inconsistent industry definitions/classifications.

This analysis attempts to respond to the concern through a two-step procedure: first, estimating the gross property value of each residential or commercial property sector regardless of ownership, occupancy, tenure, size, location, and quality. After getting to a quote for the total size of each sector, the 2nd action is to apply filters based upon presumptions for constructing class, vintage, size and/or market to more narrow the investable universe to only include institutional assets - a subsegment of the investable universe that is restricted to residential or commercial properties that fit the common requirements of institutional investors.

Sector sizes are approximated using the most trusted private and public data sources for commercial real estate available, while also leveraging the knowledge and insights produced by Clarion and Rosen Consulting Group (RCG)'s experience in the market. For the majority of sectors, the technique to calculating the general worth includes estimating the physical size of the sector, be it square video footage, systems, rooms, or beds