Institutions Maintain Target Allocations to Real Estate

Institutional target allocations to real estate hold steady at 10.7% in 2026 following the survey’s first decline in 2025, according to the 14th annual Institutional Real Estate Allocations Monitor, published by Hodes Weill, a Chatham Financial Company, and Cornell University’s Baker Program in Real Estate. Institutions expect to increase target allocations by 10 basis points to 10.8% in 2027.

After rising more than 20% between 2013 and 2022, target allocations have remained relatively flat since 2021. Approximately 54% of institutions report being under-allocated, up from 40% in 2025, representing the highest reported under-allocation since 2021. Meanwhile, the gap between target allocations and actual allocations widened by 30 bps year over year.

The “Conviction Index” in this year’s survey, measuring institutions’ view of real estate as an investment opportunity from a risk-return standpoint from one (least favorable) to 10 (most favorable), declined to 6.0 from 6.4 in 2025, matching its five-year low.

Douglas Weill, senior managing director at Hodes Weill, said, “Institutions have held their target allocations steady through a period that tested confidence, as renewed interest rate volatility and geopolitical uncertainty delayed the recovery many investors anticipated coming into the year. The widening gap between actual and target allocations reflects strong public equity performance and implies meaningful capacity for new investment. While institutions remain cautious, many are positioning to invest selectively at reset valuations, and as distributions recover, this allocation headroom could support a renewed pace of investment.”