Principal Real Estate is a top 10 global real estate manager1 with $105.22 billion in assets under management as of 30 September 2025. Providing access to capabilities across the spectrum of public and private equity and debt, our in-depth market knowledge, experienced teams, and extensive connections across all four quadrants of real estate, help us to maximize opportunities and find the best relative value on behalf of our clients.
Principal Real Estate has built its reputation as a knowledgeable and trusted advisor to institutional investors on more than six decades of commercial real estate experience3. We adopt a consultative partnership approach with clients, providing choice and customization to help meet any unique risk and return objective. Our clients tap into a wide range of capabilities through our investment platform—either through convenient commingled portfolios or tailored investment strategies.
We believe research is key to delivering on our clients’ investment outcomes. It’s also our fundamental factor in evaluating the relative value of each investment opportunity. We base our investment decisions on a combination of bottom-up asset analysis and top-down economic and sector analyses.
With seasoned teams of investment professionals around the globe in the United States, Europe, Singapore, and Australia delivering comprehensive research and market coverage, clients can benefit from our distinct 360° perspective of real estate space and capital markets.
Our private equity capabilities:
Our platforms in the U.S. and Europe provide a range of investment capabilities from traditional core strategies to opportunistic property development and redevelopment.
Our public equity capabilities:
Our globe-spanning public real estate equity offerings focus on identifying opportunities where our team’s expectations differ from the consensus.
Our private debt capabilities:
Our debt strategies are available through a variety of options, including closed-end funds, and separately managed accounts:
Our public debt capabilities:
With diverse offerings across the risk spectrum, our CMBS strategies can suit any number of investor appetites, from buy-and-hold to opportunistic.
Sector forecasts
INDUSTRIAL:
The industrial sector is facing headwinds associated with strong new supply in select metros and tenant uncertainty surrounding the impact of tariffs, which is complicating longer-term leasing conditions. Despite these challenges and higher vacancies, the sector remains sought after by both equity investors and lenders. Sector performance will be determined by both trade flows and economic growth, which we believe will drive continued leasing for larger and more modern warehouse facilities.
OFFICE:
Although office fundamentals show signs of stabilization, they remain weak due to a lack of hiring in traditional office-using occupations and a lack of traction in the return to the workplace. Vacancy rates remain elevated in the low-19% range as leasing activity remains soft. Liquidity within the sector has been mixed with some improvement in sales volume, but it has been limited to portfolio level activity and core assets, which are trading selectively. Leasing economics remains a challenge for owners as the pricing pendulum continues to tilt toward tenants. Limited new supply will help in the nascent recovery, but only for the most well positioned assets.
RESIDENTIAL:
The apartment sector is experiencing a surge in demand through the halfway point of 2025. Vacancy rates have declined sharply in the past 12 months and supply pipelines are seeing significant declines in new projects. Higher interest rates, as well as material and labor costs are the primary factors. Although rental growth has remained pressured, the sector is poised to see stronger operational performance over the balance of this year.
RETAIL:
The retail sector has outperformed on several measures and remains among the top performers in commercial real estate. Valuations appear to have stabilized, and the lack of new supply has helped maintain healthy occupancy levels. Consumer spending at brick-and-mortar stores has grown moderately, but there are concerns that household balance sheets may lead to a reduction in discretionary spending. Slower economic growth remains a risk, but neighborhoods and communities with value-oriented stores are expected to remain healthy.
OTHER:
Single-Family Rental: The single-family rental (SFR) sector has performed well over the past 12 months but faces modest headwinds in select metros due to overdevelopment, which has tempered projected rental growth. Vacancy rates in most regions remain near equilibrium, and stable demand continues to support the sector’s income profile.
Data Centers: Data center demand remains strong as new demand continues to outpace the pace of new supply. At present the top-10 U.S. markets have less than 10MW of power available, which equates to a vacancy rate of roughly 2%. The number of tenants in space continues to expand powered by both cloud computing and AI related companies. Hyperscalers and intermediaries are leasing power to satisfy short-term AI contracts.
Student Housing: The student housing sector continues to exhibit solid fundamentals. However, it is becoming more competitive as much of the demand is now being met. Increased migration to southeastern states has generated optimism, particularly with students opting to stay closer to home. Despite these positive trends, we remain cautious about the sector due to moderating enrollment trends at four-year institutions.
Life Sciences: Fundamentals in the life sciences sector remain under pressure following a wave of overdevelopment and limited new space supply. Nationwide R&D lab vacancies, according to CBRE, reached 22.7% as of mid-year despite an increase in total leasing activity. However, net absorption remained negative due to lease expirations. The sector continues to face stress from persistently soft post-pandemic venture capital funding trends.
Investment principles & strategy
We offer clients a wide range of capabilities through our investment platform, and strive to deliver consistent, risk-appropriate performance and strong relative value.
Our investment strategy and research process sits at the heart of our ability to assess relative value globally, both within and across quadrants, and to deliver on investment solutions. Our investment teams rely on our analyses and insights to inform their investment decisions.
A relative value approach to investing
We make all our investment management decisions using a relative value approach. This team-based, time-tested process includes rigorous, in-depth research and focuses on maximizing investment returns that match our clients’ risk tolerances and preferences. We base our investment decisions on a combination of bottom-up asset analysis and top-down economic and sector views. In a constantly evolving marketplace, innovation is critical, whether it’s sustainable investing or “nextgeneration” investment strategies.
Comprehensive market coverage, holistic understanding
Our experience in all four quadrants of the commercial real estate market—public equity, private equity, public debt, and private debt—gives us a holistic understanding of the market. We draw not only from the focused experience of each quadrant team, but also the insights gained from cross-team collaboration.
This helps us make a comprehensive risk-adjusted return assessment, across all quadrants, and enables a tailored approach to investing client capital based on their specific risk/return objectives.
Strategic corporate development
Principal Real Estate will continue capitalizing on the experience of our global team with an emphasis on providing strong investment performance and service to existing and new clients.
Over the next three to five years, the firm anticipates growth of real estate debt and equity assets under management, subject to investor demand as well as the availability and pricing of attractive real estate investments.
We remain committed to our core values, being highly client-centric and investment solution oriented, maintaining a fiduciary mindset, and adhering to a disciplined approach to real estate investing.
adhering to a disciplined approach to real estate investing.
Performance verification
Principal Real Estate Investors, LLC claims compliance with the Global Investment Performance Standards (GIPS®).
Compliance Statement
© 2025 Principal®, Principal Financial Group®, Principal Asset Management, and Principal and the logomark design are registered trademarks and service marks of Principal Financial Services, Inc., a Principal Financial Group company, in various countries around the world and may be used only with the permission of Principal Financial Services, Inc. Principal Asset ManagementSM is a trade name of Principal Global Investors, LLC. Principal Real Estate is a trade name of Principal Real Estate Investors, LLC, an affiliate of Principal Global Investors.
