Green Street Launches Infrastructure Solution As The Line Between The Sector And CRE Blurs

Green Street has provided research, news and predictive analytics to the commercial real estate sector for more than 40 years. The business has now expanded its coverage with a new solution: Green Street Infrastructure.

This new platform builds on the business’s capability to provide real-time market data and exclusive news to the CRE and infrastructure sectors, Green Street co-Head of Strategic Research Daniel Ismail said.

The launch has been in the making for several years, Ismail said, and is part of the business’s move to redefine what real assets intelligence looks like. In 2024, Green Street acquired IJGlobal, a provider of news and data on infrastructure, to boost its capabilities.

“We have also launched coverage of the transportation sector and plan to expand our research into infrastructure debt capital markets further,” Ismail said. “Soon we'll be tackling the utilities, energy and renewables sectors.”

Bisnow spoke to Ismail about the market trends behind the launch and what investors can expect from the evolving infrastructure sectors. 

Bisnow: Green Street has spent four decades exclusively in CRE. Why launch infrastructure coverage now?

Daniel Ismail: The line between the two asset classes, CRE and infrastructure, is blurring and in some cases is essentially gone. 

At a recent conference, a moderator asked whether the audience considered data centers to be real estate or infrastructure. The room was split 50-50. Institutional investors are reconsidering this question. 

For us at Green Street, the answer will be increasingly irrelevant because we're going to view both CRE and infrastructure as real assets. The goal is to have a single real assets research platform covering public and private markets globally. 

Bisnow: What's happening in infrastructure right now versus CRE?

Ismail: Infrastructure is having its moment in the sun. While CRE is still recovering from the decline it experienced following the rise in real rates in the last few years, institutional investors’ targets are growing in infrastructure.

Many metrics with infrastructure are doing well: transaction volumes, fundraising, total returns in both public and private markets. 

Bisnow: How are institutional investors allocated to infrastructure? Do they have room to keep buying?

Ismail: Absolutely. Generally, institutional investors have stated targets for infrastructure to be 6% of total portfolios, according to Hodes Weill. Right now, they lie about 1% under that level. While 1% doesn't sound like a lot, across global institutional portfolios, this can be tens of billions of dollars, if not hundreds. 

And unlike in CRE, where target allocations have been flattish for some time, infrastructure will likely keep drifting up as people continue to want exposure to data centers, utilities and several other hot sectors.

Bisnow: What are the main differences between CRE and infrastructure?

Ismail: The biggest clear difference is that CRE comprises commoditized assets. While an investor will view each asset as unique, requiring specialized care, in reality, there’s significantly more comparability across all CRE assets than for infrastructure assets, which tend to be much larger, more idiosyncratic and less connected to the overall market. 

For example, Class-A offices in New York City in the Midtown submarkets will have a similar look and feel, with similar rents tied to the overall economy. In infrastructure, every airport, bridge or toll road within New York City is unique.

A second major difference is size of investment. Last year, Green Street tracked about $400B of CRE transactions across about 20,000 deals. We also tracked about $470B of infrastructure deals across just 1,500 transactions. So there is about a 15 times size difference.

Bisnow: Data centers are the obvious crossover sector. What's the report actually saying about them?

Ismail: Demand behind data centers just continues to grow. Hundreds of billions is flowing into data center equity and debt, generally at healthier prices each year. Data center REITs year to date have outperformed the aggregate REIT index by 20 percentage points.

Bisnow: What about the less obvious crossover sectors — cold storage, student housing, healthcare? Are they really infrastructure now?

Ismail: While the debate continues, from our observations of trades and allocations, these sectors are increasingly finding their way into infrastructure portfolios. 

Infrastructure investors allocate to these sectors because they offer a unique risk-return profile to the broader infrastructure universe that requires specialized expertise and knowledge.

Bisnow: Green Street is adding coverage on transportation. Why does that matter for a real estate audience?

Ismail: First, transport is a large sector within infrastructure, up to 20% to 30% of a portfolio. 

Second, a CRE investor could understand many factors that define transport cash flows. For example, toll roads are defined by their contractual obligation, which determines the revenue, the capex, the lease duration. This is comparable to a real estate lease. 

Bisnow: Green Street is also expanding debt research in infrastructure. Why the distinction of a separate research group?

Ismail: To understand the valuations, trends and treatment of both CRE and infrastructure assets, it's critical to understand the entire capital stack. This requires understanding the debt capital markets because this is a sizable chunk. 

Having a separate research group allows us to dive deep into particular areas of these markets. A lender or borrower can understand appropriate pricing, loan durations and loan structure and compare globally across sectors.  

Bisnow: What should investors track over the next six to 12 months?

Ismail: Watching how institutional investors continue to treat infrastructure within their portfolios will be critical. Fund flows towards infrastructure-related assets should continue to be high. 

Second, the multitrillion-dollar question is what will happen with AI? AI is driving so many areas of the economy, including infrastructure. It has a profound influence on what happens with data centers and utilities, but it’s hard to predict what AI-related goods and services and demand will look like over the next year. 

The last is the continued blurring of lines between CRE and infrastructure. Where do data center assets get held? Where do healthcare, cold storage, student housing assets get held? This will have a big impact on new deals. 

This article was produced in collaboration between Green Street and Studio B. Bisnow news staff was not involved in the production of this content.

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