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Who invests in commercial real estate?

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An individual investor is an individual who invests relatively small amounts of money for his or her own account, as opposed to an institutional investor.  Most individuals invest in commercial real estate through one or more pooled investment vehicles, rather than directly, they most commonly using real estate investment trusts (REITs), real estate mutual funds, real estate exchange traded funds (ETFs) and crowdfunding.  The choice of investment vehicle depends on the method by which it raises capital, the type of investor it targets, the investments to be made, and various tax considerations.

An institutional investor an entity that invests relatively large amounts of money and is knowledgeable in investing and investments, including investment companies, pension funds and insurance companies.  They invest in commercial real estate markets in the form of public equity, private equity, public debt and private debt and their choice of investment vehicle is largely determined by the liquidity of the investment.

Institutional investors most commonly use institutional REITs, partnerships and limited liability companies (LLCs) to invest in real estate.  Real property in their portfolios is considered a way to stabilize and safeguard other riskier investments.

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