Low-correlation markets can help optimize portfolio returns
In a two-asset portfolio, it would be worthwhile to allocate some portion to an asset that offers lower expected returns and higher risk if the two assets are not perfectly correlated, as such diversification can improve the risk-adjusted return.
Commodity office stock is tough to price these days
The most recent Cap Rate Survey suggests greater uncertainty around office pricing, particularly for Class B and C assets where fundamentals and financial performance have deteriorated significantly more.
Office investment activity is slowly reviving, with most capital targeting higher quality buildings with stronger occupancy levels and better NOI prospects. Meanwhile, the Class B&C segments continue to struggle.