Expectations for long-term investment performance among asset classes are the drivers of asset allocation. Historical performance is often used to anchor expectations. For US commercial real estate (CRE), history suggests an 8-9% unlevered total return over the long term.
However, developments in recent quarters suggest that such an assumption may prove to be unwarranted even before considering the impact of the coronavirus. At the same time, since all asset types will confront the same changes in the investment environment, the competitive position of US CRE may well retain its relative attractiveness.
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