Office buildings are a $2,500,000,000,000 asset class in the USA alone. Throw in retail and you're at >$5 trillion of value. And the market is in total chaos

Office buildings are a $2,500,000,000,000 asset class in the USA alone. Throw in retail and you're at >$5 trillion of value. And the market is in total chaos due to COVID-19, fortunes are going to be made and lost on a ridiculous scale over the next decade as institutional investors reposition their trillions of dollars of equity in this market. Institutional investors rely on commercial real estate as it's one of the only asset classes at SCALE that can: (a) Generate cash flow (b) Is asset backed (c) Is highly leverageable w/relatively low default risk (debt) As a result the world's largest institutional funds - pensions, sovereign wealth, insurance companies, etc typically invest a large allocation of their overall funds (10 - 25%) in the CRE class. This lets them pay their current liabilities - teacher pensions, public services, insurance coupons, etc - with cash, while also generating longer term IRR returns on the appreciating assets to cover ever expanding liabilities. For generations of institutional wealth managers retail and office space were the #2 and #3 largest overall allocations of their real estate portfolios (1) Part of this is due to the scale in office / retail - those two product types represent ~$5 trillion in asset value and are only outstripped by multifamily ($2.9t) in scale. (2) But as both office and retail have been slipping for the past decade institutional managers had slowly begun to reposition and reallocate to other sectors while keeping a toe in. But as it's done elsewhere COVID-19's arrival has massively pulled trends in CRE forward by probably a decade with regard to the reallocation. As a result what most CRE investment pros are expecting a significant increase in valuation multiples across alternative CRE asset classes including multifamily, self storage, industrial, etc. What's terrifying about the idea of massive winners & losers in the space is the potential further erosion of returns on institutional investors, who are typically already well behind investment targets to maintain their expanding liabilities. Great resource / primer here if you're interested - (1) https://www.leggmason.com/en-us/insights/investment-insights/cp-major-shifts-in-ocde-sector-allocations.html https://www.leggmason.com/en-us/insights/investment-insights... (2) https://www.reit.com/data-research/research/nareit-research/estimating-size-commercial-real-estate-market-us https://www.reit.com/data-research/research/nareit-research/...