Raw Land Allocation
Raw land is typically a small but strategic portion of the portfolio due to its high risk and long-term nature
- Usually represents 5% or less of a diversified REIT or syndication portfolio
- Considered land banking for future appreciation or entitlement conversion
- Carries no immediate income, requiring longer hold periods and patient capital
- Often located in urban edge zones, future growth corridors, or infrastructure staging areas
Entitled Land Allocation
Entitled land balances risk and readiness, and is more attractive to investors seeking medium-term upside
- May comprise 10% to 20% of development-focused portfolios
- Includes parcels with zoning, approvals, and environmental clearance in place
- Allows faster vertical construction or resale at higher value
- Viewed as a transition asset class between speculative land and income-generating property
Pad-Ready or Shovel-Ready Land Allocation
Pad-ready land is closest to revenue generation and is favored for its quick deployment potential
- Often 20% to 35% of portfolios in active development or merchant build strategies
- Includes sites with graded lots, utility hookups, road access, and entitlements complete
- Ideal for build-to-suit, ground leases, or joint ventures with operators
- Attracts higher valuation due to reduced time-to-market and lower development risk
Strategic Allocation by Fund Type
Allocation to land types varies based on REIT structure, investor profile, and market cycle positioning
- Core funds allocate minimally to raw land, focusing on stabilized income-producing assets
- Value-add and opportunistic funds allocate more to entitled or pad-ready land for repositioning gains
- Syndications may emphasize entitled land for resale or partnership with vertical developers
- Market conditions (e.g., interest rates, zoning trends) can shift allocation strategies annually
