In addition to funding and sponsoring our own proprietary research, DCREC acts as a curator for important third-party research, providing access to studies and reports from leading industry and academic sources.
Performance across core real estate funds, as reported by ODCE indices, improved in 1Q26, but the underlying story remains one of divergence rather than uniform recovery. Europe outperformed the U.S., though for different reasons: U.S. returns are still income-led, while Europe is increasingly benefiting from recovering capital appreciation.
Importantly, headline returns continue to obscure a wide range of outcomes for investors. Dispersion across funds, sectors, and markets remains elevated, reinforcing the view that this is a selection-driven cycle in which manager and strategy choice are often determining results.
Rich Hill, Senior Managing Director and Global Head of Research & Strategy of Principal Real Estate, tells PLANADVISER what opportunities real estate investments can offer retirement plan portfolios and what to look for when selecting them.
Most retirement plan sponsors and fiduciaries design well-thought-out, diversified portfolios for retirement plan participants. However, when comparing U.S. defined benefit (DB) plans like pensions, to defined contribution (DC) plans like 401(k)s, we notice differences in private asset allocations, particularly to private real estate, despite both plan types seeking to solve for the same goal: income replacement in retirement.
Why the difference? And why don’t DC plans offer equivalent private asset exposure? Data suggests that DC plans utilize publicly listed real estate investment trust securities (REITs) rather than private real estate to meet their real estate allocation requirements. Is the lack of exposure to private real estate detracting from participant outcomes and a better portfolio mix?
In this paper, Clarion Partners will show that there is compelling data for DC plan sponsors to consider including private real estate as an investment option in a multi-asset retirement plan.
Defined contribution (DC) plans are increasingly exploring private market investments, including private real estate, as a means to enhance diversification, generate stable income, and improve long-term risk-adjusted returns. Historically, DC plans have relied heavily on public market solutions, particularly those focused on publicly listed REITs. While these options offer ease of implementation and liquidity, they may not fully capture the benefits available through private real estate strategies. As interest in private markets grows, it is essential to reevaluate the myths and misconceptions that may be preventing broader adoption of these strategies within DC plans.
As access to alternative assets in defined contribution retirement plans (including 401(k) and 403(b) plans) expands, learn about the potential benefits of adding commercial real estate to a multi-asset portfolio.
Defined contribution (DC) plans are at an inflection point. As participant balances grow and outcomes based retirement frameworks mature, the question is no longer if private assets belong in DC plans, but how they can be implemented responsibly, with scale, and in a way that preserves fiduciary integrity. Importantly, the concept of incorporating private assets into DC is not new. For more than two decades, private real estate strategies have set a precedent for including less liquid asset classes within a DC framework.
The Center for Retirement Initiatives (CRI) is a research center of Georgetown University’s McCourt School of Public Policy, one of the top-ranked public policy programs in the nation. Through its academic reputation and ability to engage with policymakers, business leaders, and other stakeholders, the McCourt School attracts worldclass scholars and students who have become leaders in the public, private, and nonprofit sectors.
Private real estate investments typically only available for institutional and wealthy investors can be a stable hedge against inflation and volatility. They’re available for DC retirement plans, but uptake so far has been slow.
How America’s largest municipal county revitalized its DC plan communications to reach participants during uncertain times
Defined benefit plans, endowments, and foundations have long enjoyed the benefits of investing in private real estate, namely diversification, lower volatility of returns, a hedge against inflation, and the potential for improving risk-adjusted investment performance,
Real estate is tangible property consisting of land and improvements (buildings). Real estate can be divided into two categories: commercial and residential. Commercial real estate refers to the direct ownership of income-producing properties including industrial/warehouse, office, and retail buildings, as well as segments such as medical office and self-storage. Although technically residential, rental apartments (including student housing) are also often classified as commercial real estate.
The Pension Protection Act of 2006 (the “PPA”) gave a boost to the movement to better diversify defined contribution plan portfolios.
options” or “QDIAs,” which are discussed in
more detail below.
