What Is Private Real Estate?
Professionally managed, income-producing properties. The third largest institutional asset class.
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Private Real Estate is the Third Largest Asset Class.
Occupying the middle ground between equities and fixed income, it brings together potential for income and growth in one allocation.
Fixed Income
Income
Real Estate
Equities
Total return
Source: (Fixed Income and Equities) - SIFMA & Siblis Research Florance, Andrew & Miller, Norm & Spivey, Jay. (2010). (Real Estate) - Slicing, Dicing and Scoping the Size of the U.S. Commercial Real Estate Market. Journal of Real Estate Portfolio Management. 16. 10.1080/10835547.2010.12089875. Size of commercial real estate market updated from paper using same methodology, changes in CoStar Commercial Repeat Sales Index. Figure is understated as it doesn’t include new construction. Fixed Income data as of Q4 2022. Real Estate and Equities data as Q1 2023.
Why It Matters
Unlike public real estate, private real estate returns track the underlying properties—rent generated and long-term value. Institutions have relied on it for decades for its differentiated return profile.
Contractual rental income from tenants provides a consistent, reliable cash flow stream that is less correlated to public market volatility.
Low correlation to stocks and bonds gives private real estate a distinct role in portfolio construction, reducing overall volatility.
As a real asset, property values and rental income tend to rise with inflation, providing a natural hedge against purchasing power erosion.
Property values appreciate over time through market dynamics, strategic improvements, and increasing demand across growing sectors.
Property Types in Private Real Estate
Portfolios diversify across property types to spread exposure across sectors of the economy.
Industrial
Warehouses, distribution centers, and logistics facilities that support modern supply chains and e-commerce.
Multi-Family
Apartment communities and residential rental properties providing essential housing in growing markets.
Office
Class A office buildings in major markets serving corporate tenants and professional services firms.
Retail
Grocery-anchored centers, mixed-use retail, and neighborhood shopping destinations with stable tenant demand.
Specialty
Data centers, life science facilities, medical offices, and other niche sectors driven by structural demand.
Why Private Real Estate Completes the Portfolio
The Traditional 60/40
The 60/40 portfolio has limits. Both asset classes are publicly traded, often correlate under stress, and offer no real-asset exposure.
Private Real Estate
Private real estate is driven by rental income, property demand, and real asset values. Returns have low correlation to stocks and bonds—a complement to traditional portfolios.
Rental Income
Contractual cash flows from tenants provide durable, predictable income.
Property Demand
Structural trends in housing, logistics, and technology drive occupancy and rents.
Real Asset Values
Physical properties hold intrinsic value that responds to inflation and economic growth.
How Advisers Build with Accordant
Three strategies. Each with a defined role in a portfolio.
Index
Core ExposureDiversified core private real estate exposure through the Accordant ODCE Index Fund (ODCEX), designed to track the portfolios represented in the NFI-ODCE Index.
Growth
Appreciation FocusStrategies focused on long-term property appreciation and development-driven value creation, targeting sectors and opportunities with higher growth potential.
Income
Income GenerationStrategies designed to generate durable income through a mix of institutional-quality real estate debt and equity investments.