Photo Credit: Unsplash How does commercial real estate investment solve diversification needs with its new larger role in asset allocation? Even though some notable investment leaders say investors should be focusing versus diversifying incredibly broadly as most stock brokers suggest, many sophisticated investors and private funds appear to be shifting larger percentages of their portfolios to alternative assets including commercial real estate. It&#x27s hard to pick and mold winners for the average individual investor. You don&#x27t have the billions and influence to make a startup, product, or stock a success against the odds. Not like Warren Buffett, Peter Thiel or the panel of investors on Shark Tank do. At the same time, blind diversification doesn&#x27t serve individuals much better. Walk into more brokers&#x27 offices and you&#x27ll be invested in 100s of stocks, funds, and funds of funds, without having any idea what you are invested in. You do it because everyone including your broker says to diversify; however, most brokers and other people actually don&#x27t know what&#x27s going to work. Blindly diversifying is like putting one of your casino chips on each number of a roulette table. It&#x27s not a reliable way to get ahead, and often leave clients completely exposed to risks of stock market volatility. How can commercial real estate investment solve the dilemma and equation? Real estate is a hard tangible asset. That means protection for investment capital. If you&#x27re wiped out in the stock market you&#x27ll have nothing to reinvest and rebuild with. While property values can change over time the hard asset always remains. There is capital growth potential (both organic and forced through improvements). Regardless of that performance, real estate has the ability to produce steady cash yields, and that&#x27s vital for every level of investing. Even a single commercial property can also provide an exceptional amount of diversification in a portfolio as well. That starts with multiple tenant properties. If you have 10, 20, or 200 tenants that offers broad diversification. Even if 5% or 30% fail to perform in a crisis, the others can ensure the investment is still profitable. With a commercial real estate property your diversification comes from having tenants in various industries, like a multifamily owner can have tenants in different career fields to ensure ongoing performance. The same goes for a retail owner who has a mixed tenant base in different industries or redeveloping an underperforming asset to a mixed use property with perhaps retail and office tenants. Summary If you want to diversify and remain in control of the diversity and of your returns, then commercial real estate has a lot to offer. It can even bring together the best of both investment styles. Which is likely one of the reasons it continues to gain traction with sophisticated investors. How are you solving the balance between the need for consistency and growth in your investment portfolio?