MetLife says widening income split is redirecting commercial real estate bets

MetLife Investment Management says the widening gap between affluent consumers and everyone else is increasingly shaping how it places capital in commercial real estate, with senior housing rising to the top of its latest rankings and luxury lodging outperforming budget hotels. According to Bisnow National, the firm’s conviction in that “K-shaped economy” has strengthened since the war with Iran began and oil prices moved higher, adding to inflation pressures.

William Pattison, head of research and strategy for real estate at MetLife Investment Management, said the shift has mainly influenced which assets the firm prefers within property types rather than causing major changes at the property-type allocation level. MetLife, which manages $736B in assets including $106B of real estate, uses a frequently updated private capital placement scorecard to guide clients and its own portfolio management strategy.

Senior housing moved from second to first in MetLife’s May rankings, a change tied to aging baby boomers entering the age brackets that drive demand for senior care. Pattison said some of the strongest growth is in communities charging rents above $10K per month, including in relatively low-cost markets such as Texas and Florida.

Lodging shows the consumer divide most clearly, Pattison said. MetLife tracks nine hotel segments by quality and has found what he described as an “almost perfect linear trend,” with luxury properties posting revenue per available room growth while economy assets have seen declines of around 5%.

Key Details

• Firm and strategy: MetLife Investment Management publishes a private capital placement scorecard, most recently included in its May U.S. Chartbook, to inform client advice and portfolio decisions.
• Top-ranked sector: Senior housing climbed to No. 1 over the last year, reflecting demographic demand as baby boomers age into the market.
• Industrial and retail: Industrial assets near population centers rank third, just behind net lease retail. Net lease retail was the top-ranked sector a year earlier and remains highly ranked because Pattison believes it is positioned for consolidation and more institutional ownership.
• Cold storage: Cold storage fell seven spots to No. 15. Pattison said a larger construction pipeline, modestly elevated vacancy and aggressive pricing have made the sector less attractive than in prior years. Newmark data cited by Bisnow said about 300 new cold storage operators emerged between 2020 and the end of 2025, helping push vacancy to a 20-year high.
• Other moves: Single-family rentals climbed five spots since 2025. Self-storage fell five spots after Public Storage agreed to buy National Storage Affiliates Trust in a $10.5B cash deal.

Why It Matters

For CRE professionals, the report underscores that consumer bifurcation is affecting property selection even when broad sector allocations stay relatively steady. Assets tied to wealthier households, aging demographics or stable income streams appear to be gaining favor, while sectors hit by oversupply or weaker lower-income demand may face a harder underwriting environment.