Creating Jobs Through Pension Fund Investments in Real Estate: Innovations from California

by Edward Blakely, James Lynch, Kenneth Skudrna



There are two important features that make real estate an attractive investment for pension funds. First, real estate holdings provide a hedge against inflation. In the last decade, most commercial real estate investments have outperformed securities and government bonds with respect to inflation. Second, the real estate income-properties market has exhibited far less volatility than the securities markets. In contrast to investments in stocks, real estate investments are tangible, with asset values that are less likely to drop to zero. Finally, real estate provides a viable means of intervening in the economic system for the express purpose of job creation. Strategic investments in real estate can provide pension funds with the ability to stimulate employment and economic development. New construction and similar real estate projects increase employment, expand public-sector activities and promote economic growth. Pension fund managers can use a variety of approaches to achieve their real estate objectives.

California Management Review

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Published at Berkeley Haas for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.

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