401ks Hold $18 Billion in Real Estate

The popularity of real estate in 401(k)s continues to grow.The popularity of real estate in 401(k)s continues to grow.

In a survey of investment managers that collectively have more than $2.5 trillion in assets under management, the Defined Contribution Real Estate Council (DCREC) found growing interest in offering private equity, or direct owned, real estate as a defined contribution (DC) plan investment option.  

Daily valued real estate assets held by responding firms totaled $32 billion, with about $18 billion of that in the DC space.  Of that, approximately 11 percent was allocated to public REITs, and 4.6 percent was allocated to real estate outside either public REITs or direct-owned real estate, the survey found.

The DCREC survey was completed in the second quarter of 2015. The council said it anticipates conducting the survey on an annual basis going forward.

“The goal of the survey is to give plan sponsors greater access to information on the depth and breadth of investment products offering exposure to private equity or direct owned real estate in the defined contribution (DC) marketplace,” John Payne, DCREC co-president, said in a statement.  “With this initial survey, we’ve established a baseline for the industry that will allow us to better understand the magnitude of interest, and to measure the pace of growth going forward.” 

“Based on the data in the survey, plan sponsors and consultants can now say with confidence this market is sizable and provides multiple offerings,” Payne added. “This should encourage the industry to continue to look for ways to expand the availability of real estate options in DC plans.”

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