Commercial Investment Real Estate May/June 2017 - Page 50

CCIM CONNECTIONS Core Investor by Samuel S. Moon mid the volatile backdrop of a new presidency, it is U.S. core commercial real estate that offers great opportu- nity for investment gains, income, and diversifi cation for David Gilbert, president and chief investment offi - cer for Clarion Partners. “The primary reasons to invest are relatively high current yields, appreciation potential, infl ation protection, low vola- tility, and diversifi cation through a low correlation to stocks and bonds,” Gilbert says. “It’s no surprise that institutional investors have been progressively increasing their target allocation to real estate now to over 10 percent in their mixed asset portfolios.” With U.S. Treasury bond yields recently reaching a 17-month high and expectations that the new Trump Administration will cut taxes cou- pled with increased infrastructure spending, many investors are won- David Gilbert, dering whether this is the right time president and chief to sell off their real estate positions or investment offi cer for begin increasing them. Clarion Partners A 48 May | June 2017 “The Trump pro-growth policy is a largely defi cit-funded expansionary fi scal stimulus package,” Gilbert says. “The econ- omy in both real GDP growth and job creation should benefi t over the next three to four years, and I see higher demand for commercial space based on current proposals from the Trump administration.” For international investors, U.S. core real estate offers attrac- tive current yields and appreciation potential. Given many global concerns such as a slowdown in China, Brexit, European Union uncertainty, and emerging market volatility, the U.S. is still considered a safe haven globally for both institutional and indi- vidual investors. “Currently, there are 1.3 million new households and 2.3 mil- lion new jobs being created each year, suggesting strong demand for commercial space,” Gilbert says. “After the energy industry downturn over the past two years, U.S. corporate profi ts have fully recovered and are on track to grow by 11 percent over the next 12 months, thanks to new government initiatives .” Moreover, U.S. consumers are in better shape today, with household wealth at all-time highs and accelerating year-over- year wage growth. Gilbert remains bullish to the core. Samuel S. Moon is media relations manager at CCIM Institute. COMMERCIAL INVESTMENT REAL ESTATE