In the midst of a continued U.S. economic recovery and global stock markets volatility, commercial real estate is looking like the safest bet for high-net-worth (HNW) investors. But which real estate sectors provide the best long-term investment opportunities? Over the past five years, Inland Private Capital Corp. (IPCC), founded in 2001 in Oak Brook, Ill., has specialized in serving high-net-worth individuals.

“We’ve been very focused on, and intrigued by assets that have operating characteristics that provide us with an opportunity to add value through little old-fashioned meat-and-potatoes property management,” says Keith Lampi, IPCC president and COO. “Our vehicles are more hinged on income, plus they’re not very growth-oriented, and that really appeals to a segment of the HNW crowd. Other operators have growth vehicles or development deals that are sometimes invested in value-add-type transactions that garner the interest of some of the HNW crowd. But our investment approach has been very focused on preservation of capital and income. That’s one asset allocation the HNW investor looks for, and we are just one segment of the overall picture.”

Below, Lampi offers his thoughts on the best property sectors to invest in:

Multifamily. There’s a very strong growth phenomenon that currently exists with the Millennial segment of the population—and even though the Millennial tagline is being used over and over again, this phenomenon really does have momentum. This segment of the population is graduating from college with an unhealthy amount of student loans that’s impeding their ability to buy their first homes, so they tend to rent for a longer period of time. But IPCC also believes there’s a shift in the appetite for planting roots in any one location—the Millennial generation has a more transient demographic profile. There’s a willingness to relocate for job opportunities. They’re the children of the baby boomers, who created a lot of wealth, so these are individuals who grew up with very nice, solid finishings as it relates to their homes. They’re demanding a very high-end amenity package, and a lot of the multifamily product that’s been recently brought to market fits within that appetite. So multifamily is the sector that IPCC been most bullish on. The firm is taking a very opportunistic approach, so it’s looking nationwide across a variety of markets: markets that have strong growth in population and jobs, a diverse employment base and strong markets fundamentals. There are some markets that have been overbuilt, where excessive supply has just come online, and it may take a while for demand to catch up to that. But there are a lot of other markets where supply-and-demand fundamentals are more in synch.

Denver is where IPCC has the strongest presence. The firm currently manages about 1,500 units there. It quickly established a foothold in that particular market because it’s a market that appeals very strongly to the Millennial generation. “A lot of people will move there and find a job after—they don’t necessarily move there for a job. The overall growth dynamic in that market has created a very strong demand, which allows us to realize substantial rent growth, and that translates to the overall economic viability of the multifamily sector in that particular market. We’ve also seen a lot of opportunity in Texas: Both San Antonio and Dallas are very strong markets, Austin has been phenomenal, and to some extent, so has Houston, although there has been a little bit of overbuilding in Houston,” says Lampi.

Student housing: This sector has that residential undertone, but it’s very different asset type when compared to multifamily. There’s still a portion of the Millennial generation that is either in school or preparing to go to college. It is very market-driven and every university has different dynamics as it relates to commuter trends regarding on-campus or off-campus housing. But the same Millennial appetite for very high-end, full-amenity-package product is very much alive in the student housing arena. “We see similar opportunities to drive rental growth, which ultimately trends right for our investors on a total return basis,” Lampi notes.

When it comes to student housing, IPCC has focused less on geography and more on each university’s enrollment trends. From a macro perspective, there’s very broad-spanning data that suggests that enrollment as a whole for the student housing sector has actually declined, so it makes sense to ferret out which universities are poised for consistent growth that’s ultimately going to drive the ability to raise rents as the economy continues to grow and expand and the student population base grows. IPCC typically looks at larger universities, with anywhere from 20,000 students and up, and enrollment trends over the past five years. The firm likes to see enrollment consistently increasing.

Retail: The firm has a very heavy presence in multi-tenant shopping centers because it likes assets that have operating characteristics. In retail, national tenants provide an anchor and stability for the overall net income profile, but there are also smaller tenants that are going to consistently be rolling in their leases, and that server as a rent growth driver. From a geographical standpoint, a lot of the dynamics that drive IPCC’s asset selection process in the multifamily sector also apply to retail. The firm is looking for areas that have growing populations and, obviously, income levels to support retail spending.

Most of the major markets throughout the United States are showing that, so retail traffic and growth in that arena will continue to trend upward.

Parking and self-storage: The firm has seen these opportunities increase as the economy continues to grow. Any asset with operating characteristics like parking or storage allows for increases in rental rates on a more consistent basis, but with parking, the parking rate can be reset on a daily or hourly basis. There’s an established demand base for parking garages and self-storage units. With both of them, there is stability and consistency in income, and the opportunity to drive organic growth, which is really the growth and unallied income kind of component that the high-net-worth crowd is looking for.

Medical office and office: Inland Private Capital Corp. has purchased a small amount of assets in the medical office arena on campuses affiliated with major hospital systems. The health care sector has potential future growth and definitely has legs. The growth in that sector hinges on the aging baby boomer population. It’s not an area in which the firm has been a major player, but there are opportunities there, and that is another sector that definitely resonates with the high-net-worth crowd, according to Lampi.

“When we first got started, leading into the last market cycle, we were heavily investing in office, but we’ve pulled back on that because some elements of the office sector have led us to pause,” he adds. “I don’t want to overstate the changing dynamics of the work environment and the impact the Millennials have had on that, but we’re seeing companies that, even though they’re growing, have less need for workspace. Many employees are traveling, and are in and out of the office, which has led to shared workspaces—that’s one reason companies are signing shorter-term leases, to give themselves more flexibility and not commit to taking up as much office space. This sector is very market driven. If you’re looking at major markets like Chicago and New York or other major CBDs, there’s probably some opportunity for office investment, but within the context of broader suburban sprawl, we’ve been a little more bearish on office.”