06/01/2004
The past decade has seen a revolution in commercial real estate. The former volatile province of institutional investors and real estate moguls has become increasingly tied to broader markets. “There’s now a market discipline instilled by Wall Street on what was once a very rambunctious industry,” says Georgette Poindexter, professor of real estate at the Wharton School of Business, University of Pennsylvania. The result, she says, is a far more stable and conservative market.
Investors can tap this market by
investing in real estate investment trust (REIT) stocks, or by investing
directly in existing properties and projects under development. Both options are
quickly becoming standard components of our diversified portfolios. “Real estate
delivers higher returns with lower volatility,” says John A. LeMieux, a
portfolio manager with financial services provider Advest in Portland, Maine.
“For someone whose portfolio is in good shape, and doesn’t need aggressive
growth, this approach diminishes much of the worry about market fluctuations.”
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