The NFI-ODCE Index, the leading benchmark for U.S. core private real estate performance, offers one of the clearest signals of how high-quality real estate is performing, tracking 25 of the largest open-end diversified core funds in the country.
Accordant Investments’ CIO Garrett Zdolshek joined Geoffrey Dohrmann, CEO of Institutional Real Estate Inc. (IREI), to share insights on this important benchmark and the evolving landscape for private real estate. The discussion highlighted where the market stands today, the factors driving performance, and what advisers should watch as they move through 2025.
Watch the complete Q2 2025 NFI-ODCE Market Update with Garrett Zdolshek, CIO of Accordant Investments, and Geoffrey Dohrmann, CEO of Institutional Real Estate, Inc., or continue below for a discussion of key themes and highlights.
The Q2 2025 NFI-ODCE Index results show a market that’s stabilizing after a period of steep declines. Liquidity is improving, income remains steady, and sector performance is diverging in ways that matter for future allocations. Here’s what the latest private real estate market update revealed — and why it matters.
For the past five years, real estate investing was a game of sector bets: overweight industrial, underweight office, and the relative performance spoke for itself. That dynamic has shifted. In today’s environment, the NFI-ODCE Index shows that broad sector positioning is less decisive. The real differentiators are at the asset level — how properties are managed, where income growth is coming from, and which individual assets can withstand market pressures.
Why it matters: The shift means that long-term returns will depend less on simply picking the “right sector” and more on owning high-quality assets in the best locations — and managing them effectively.
Liquidity has dominated headlines in private real estate since redemption queues swelled in 2022. For many investors, it became the single biggest risk factor in open-end funds. But the Q2 update shows that the worst appears to be behind us. Redemption queues are shrinking, liquidity windows are reopening, and funds within the NFI-ODCE Index are showing the kind of resilience that once defined the post-GFC recovery.
Why it matters: Improving liquidity signals resilience in core private real estate, supporting stronger NFI-ODCE Index performance ahead.
Performance across property sectors has splintered. Office remains deeply discounted, industrial is normalizing, and alternatives like data centers are emerging as powerful drivers of returns. For advisers, this divergence means sector narratives must be more nuanced: one-size-fits-all assumptions no longer work.
Why it matters: The market is no longer moving in lockstep. Advisers who understand sector dynamics can better anticipate where returns will be generated and where risks remain.
Beneath the headlines, core real estate fundamentals are holding firm. Cap rates have steadied, occupancy remains high in most sectors, and NOI growth is trending in line with long-term averages. Combined with a softer inflation outlook, these fundamentals suggest the market is stabilizing, not sliding into further distress.
Why it matters: Stable fundamentals plus moderating inflation give the NFI-ODCE Index a foundation for steady performance heading into 2026.
One of the strengths of underlying NFI-ODCE funds has always been their conservative use of leverage. Q2 results confirm that this discipline is paying off. With modest loan-to-value ratios and mostly fixed-rate debt, NFI-ODCE portfolios are insulated from the debt pressures weighing on more aggressive strategies.
Why it matters: Conservative leverage is why NFI-ODCE Index funds are weathering this rate environment better than higher-risk strategies — a key point when evaluating resilience for client portfolios.
Transactions have slowed from pre-2022 levels, but the underlying funds of the NFI-ODCE Index continue to see steady deal activity. Much of it is concentrated in office dispositions, while new capital is flowing toward industrial, alternatives, and even infrastructure. These flows are important signals for where institutions see long-term value emerging.
Why it matters: Capital is moving away from challenged sectors and into areas of strength like industrial, alternatives, and infrastructure. Advisors who track these shifts can align client portfolios with where demand and resilience is building.
Few sectors are as central to the underlying NFI-ODCE Index portfolios as multifamily. Despite near-term supply pressures, it remains one of the most resilient categories, underpinned by affordability challenges in the housing market and consistent long-term demand from renters priced out of ownership.
Why it matters: Multifamily continues to be a cornerstone of underlying NFI-ODCE fund portfolios, providing stability in both up and down markets.
The NFI-ODCE Index is a roadmap for where capital, valuations, and opportunities in core private real estate are heading. For advisers, understanding the NFI-ODCE Index is like understanding the S&P 500 of private real estate: it provides the essential context to anticipate client questions, explain market shifts, and position portfolios for what’s next.
IMPORTANT DISCLOSURES
Accordant Investments LLC (“Accordant”) is an SEC registered investment adviser. For more information about our services and disclosures, please visit our website at www.accordantinvestments.com. This content does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or any other product or service managed by Accordant.
The NCREIF Fund Index – Open-End Diversified Core Equity ("NFI-ODCE") is a capitalization-weighted, gross-of-fees, time-weighted return index of open-end core real estate funds with at least 95% of their assets invested in U.S. operating properties and no more than 40% leverage. The ODCE Index is compiled by the National Council of Real Estate Investment Fiduciaries (NCREIF) and is reported quarterly. Indexes are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested in directly.
This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. Accordant is not adopting, making a recommendation for or endorsing any investment strategy or particular security or property mentioned in this article. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. All investing is subject to risk, including the possible loss of principal. Accordant Investments, LLC (“Accordant”) cannot guarantee that the information herein is accurate, complete or timely.
Past Performance does not guarantee future results. Therefore, you should not assume that the future performance of any specific investment or investment strategy will be profitable or equal to corresponding past performance levels. Inherent in any investment is the potential for loss. It should not be assumed that any investments in securities, companies, sectors, or markets identified and described in this content were or will be profitable. Diversification strategies do not ensure a profit and do not protect against losses in declining markets.
Accordant has not made any representation or warranty, express or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of any of the information contained herein (including but not limited to information obtained from third parties), and they expressly disclaim any responsibility or liability, therefore Accordant does not have any responsibility to update or correct any of the information provided in this article.
All real estate investments have the potential for value loss during the life of the investment and the sponsor can make no assurances that any investment will achieve its objectives, goals, generate positive returns, or avoid losses.