Stock Market vs. Commercial Real Estate – What’s the Better Investment?

Stock Market vs. Commercial Real Estate

What’s the Better Investment?

CRE Offers Compelling Yields Versus Alternatives

  • Returns vary wildly across the investment landscape – Real estate and stock market most popular
  • Private equity funds, REITs, partnerships and direct ownership offer variety of CRE investment options
  • CRE Beats the Stock Market Over the Last 20 Years
  • Stock market outperformed in 2019 – total return of 26%, one of the strongest years on record
  • On a long-term basis, however, real estate wins
  • The 20-year total return on a $1M investment
    • Stock Market:   $2.7M (+174%)
    • Commercial Real Estate:   $4.8M (+377%)

Stability, Leverage, Asset Options – Key CRE Benefits

  • Real estate less volatile compared to the stock market
  • Ability to source debt boosts leveraged returns
  • The broad range of sectors offer investors options

*Commercial real estate total return includes apartment, retail, office, & industrial properties $1 million & greater; includes non-leveraged weighted average returns on property price appreciation & cumulative cash flow S&P 500 total return based on price index appreciation & cumulative dividends (dividends not re-invested) Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics, Standard & Poor’s*
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