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Coronavirus outbreak threatens industrial real estate returns

March 17, 2020 / ARLEEN JACOBIUS
SHARESHARESHARE

Industrial properties have been a top-performing real estate sector but, though still early, COVID-19 could cut into returns, according to a recent presentation to CalSTRS officials. Warehouses in the U.S. earned 13.4% in 2019, the only sector to produce double-digit returns in the NCREIF Property index, according to data from the NCREIF data. The second highest-performing sector of NCREIF Property index was office with 6.6%. While hotels have been the hard hit by the coronavirus, the industry recently is beginning to see "chinks in the armor" in industrial properties, especially those in the port market, Taylor Mammen, a Los Angeles-based senior managing director based in at consulting firm RCLCO, told the CalSTRS' investment committee on March 4. California State Teachers' Retirement System, West Sacramento, has a 13% target real estate allocation, with $34.2 billion invested in real estate as of Sept. 30, according to its latest semi-annual real estate report. A co...