Defined Benefit
Insurance Assets
Nonprofit

Can Institutional Investors Target ‘Food Deserts’ for Investment?

Can Institutional Investors Target ‘Food Deserts’ for Investment?
clock
3 min 15 sec

“Food deserts” represent areas of the United States where people have limited access to a variety of healthy and affordable food. Some of the most comprehensive research on the topic comes from a 2012 study conducted by the U.S. Department of Agriculture (USDA) Economic Research Service. This study, which defined “limited access” based on a census tract’s distance from a large grocery store or supermarket, found that food deserts often feature a large share of households with low incomes, inadequate access to transportation, and a limited number of food retailers providing fresh produce and healthy groceries for affordable prices. This study also found that:

  • Areas with higher levels of poverty were more likely to be food deserts. For other factors, such as vehicle availability and use of public transportation, the association with food desert status varied across very dense urban areas, less dense urban areas, and rural areas.
  • In all but very dense urban areas, the higher the percentage of minority population, the more likely the area was to be a food desert.
  • Residents in the Northeast were less likely to live far from a store than their counterparts in other regions of the country with similar income levels.
  • Rural areas experiencing population growth were less likely to be food deserts.
Food Desert Investments: Highlights

These characteristics present both opportunities and risks from an investment perspective.

food desert investments

Institutional investment in food deserts to date has been limited, based on Callan’s research. Traditional real estate investment managers have tended to shy away from food deserts, primarily citing unfavorable demographics and fundamentals. A handful of institutional real estate funds own retail centers anchored by grocery stores that would become food deserts if the grocer were to leave, increasing the importance of responsible ownership. Managers note that expanding the square footage of the grocer to provide additional fresh produce options has been an impactful and profitable strategy for these centers. There are few examples of ground-up development of a retail center where a new grocer was established in an area that was previously considered to be a food desert. Callan notes that the activity of opportunity zone funds may have some impact on investment in food deserts, as there is approximately a 30% overlap between opportunity zones and food deserts, according to J.P. Morgan Asset Management.

Much of the activity in food deserts has come from Community Development Financial Institutions (CDFIs) such as the Reinvestment Fund in Philadelphia and IFF in Chicago. Additionally, impact investors and philanthropic organizations have also been active with retail projects in food deserts.

While food desert investments have not been prevalent in institutional real estate portfolios, and this appears unlikely to change anytime soon, increasing government incentives and additional sources of financing for both retailers and real estate developers/owners may help support food desert opportunities in the future.

Disclosures

The Callan Institute (the “Institute”) is, and will be, the sole owner and copyright holder of all material prepared or developed by the Institute. No party has the right to reproduce, revise, resell, disseminate externally, disseminate to any affiliate firms, or post on internal websites any part of any material prepared or developed by the Institute, without the Institute’s permission. Institute clients only have the right to utilize such material internally in their business.

Posted by

Share
Share on facebook
Share on twitter
Share on linkedin
Related Posts
ESG

Energy Transition Is Having a Moment, but Does It Have Staying Power?

Jan Mende
Jan Mende describes energy-transition investments and how they can be incorporated into the portfolios of institutional investors.
Private Markets

NCREIF Property Index Falls 3.5% and REITs Lag Equities

Munir Iman
Kristin Bradbury, Munir Iman, and Aaron Quach analyze real estate and real assets activity in 4Q22.
Private Markets

Making Sense of the Private Real Estate Market Environment

Aaron Quach
Aaron Quach helps institutional investors make sense of the valuations for their private real estate investments in the current interest rate environm...
Public Markets

Global Stocks Rebound in 4Q; Fixed Income Suffers Dreadful Year

Kristin Bradbury
Kristin Bradbury analyzes global equity and fixed income markets in 4Q22 and for the full year.
Private Markets

Private Real Estate Gains, but REITs Fall; Commodities Also Dip

Munir Iman
Kristin Bradbury, Munir Iman, and Aaron Quach analyze real estate and real assets performance in 3Q22.
ESG

Green Financing in Residential Real Estate

Aaron Quach
Christine Mays and Aaron Quach explain green financing and how it can help investment managers obtain more favorable financing terms.
Public Markets

There Was Really No Place to Hide in World Markets

Kristin Bradbury
Kristin Bradbury analyzes global equities, fixed income, and real assets markets in 3Q22, where there really was no place to hide.
Private Markets

Private Real Estate Strong; REITs Lag Equities

Munir Iman
Private real estate performed well in 2Q22 while REITs lagged equities. Real assets saw widespread drops.
Public Markets

Few Bright Spots as Markets Continue to Drop

Kristin Bradbury
Kristin Bradbury recaps how the global markets performed in 2Q22.
Private Markets

Investing in Data Centers: The Real Assets of the Digital Age

Lauren Sertich
Lauren Sertich provides a summary of her recent paper on investing in data centers.

Callan Family Office

You are now leaving Callan LLC’s website and going to Callan Family Office’s website. Callan Family Office is not affiliated with Callan LLC.  Callan LLC has licensed the Callan® trademark to Callan Family Office for use in providing investment advisory services to ultra-high net worth clients, family foundations, and endowments. Callan Family Office and Callan LLC are independent, unaffiliated investment advisory firms separately registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940.

Callan LLC is not responsible for the services and content on Callan Family Office’s website. Inclusion of this link does not constitute or imply an endorsement, sponsorship, or recommendation by Callan LLC of their website, or its contents, and Callan LLC is not responsible or liable for your use of it. When visiting their website, you are subject to Callan Family Office’s terms of use and privacy policies.