Industrial properties have been a top-performing real estate sector for institutional investors, and while the COVID-19 crisis is expected to pressure returns, the property type still is expected to outperform.

Warehouses in the U.S. earned 13.4% in 2019, the only sector to produce double-digit returns in the NCREIF Property index, according to NCREIF data. The second highest-performing sector of NCREIF Property index was office, with 6.6%.

While hotels have been the hard hit by the coronavirus, the industrial sector recently is beginning to see “chinks in the armor” in industrial properties, especially those in the shipping port market, Taylor Mammen, a Los Angeles-based senior managing director and director of institutional adviser services at RCLCO Real Estate Advisors, told CalSTRS’ investment committee on March 4.

The $252.4 billion California State Teachers’ Retirement System, West Sacramento, has a 13% target real estate allocation, with $34.2 billion invested as of Sept. 30, according to its latest semi-annual real estate report.

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