A RealtyShares survey released Wednesday revealed 53% of Americans want to invest in commercial real estate within their communities, but many do not feel they can. For respondents who never invested in commercial real estate, affordability and accessibility were seen as major roadblocks. The survey, conducted by Harris Poll, gathered insights on individual investment beliefs from over 2,000 Americans in December.
About half of Americans who invest in commercial real estate see it as a good diversification option, according to RealtyShares Chief Risk Officer Arash Sotoodehnia.
“Times when markets are volatile remind investors of the importance of maintaining a diversified portfolio,” Sotoodehnia said in an email. “Real estate, as an asset class, can help diversification when added to portfolios holding equity and debt instruments.”
A previous RealtyShares report revealed real estate investment outperformed the stock market two-to-one. Real estate posted returns of over 10% annually compared to 5.4% annually for the S&P 500 Index from Dec. 31, 2000, to Dec. 30, 2016. RealtyShares' typical returns ranged from 8% to 20% across commercial equity and debt opportunities in office, multifamily, hospitality, retail and industrial assets.
Over 60% of respondents in RealtyShares' report felt they lacked the necessary funds while 19% said they do not know how to invest. According to the report, 89% have never invested in commercial real estate, which RealtyShares said could be creating an investing gap.
Millennials appear more eager to tap into this multibillion-dollar asset class than some older adults. The survey found 67% of Americans aged 18 to 34 would invest in local commercial real estate if given the chance compared to 45% of adults aged 45 and older.
The biggest hindrance to commercial real estate investing may be the perceived lack of opportunity, according to the report. Seventy-one percent of millennials want investing to be easier, while 62% are looking to local government to attract more commercial real estate investment.
The survey found a quarter of U.S. adults felt commercial real estate investment has the biggest impact on enhancing the reputation of a community.
Roughly one in five of those who have or are currently investing in commercial real estate have done so for reasons that may support their community. About 20% said they would help a friend or family member with capital for a commercial real estate investment while 17% said they would invest in a facility for their own business.
“People clearly see commercial real estate as a driver to a healthy, thriving community, and they’re interested in participating,” RealtyShares CEO Edward Forst said in a statement.
