Infrastructure, Real Estate, and the Next Wave of Alternative Investments

Infrastructure, real estate, and the next wave of alternative investments

When markets become volatile, most investors fall back on the traditional 60/40 portfolio: 60% stocks, 40% bonds. However, as many learned in 2022, stocks and bonds can decline simultaneously. Business owners and families relying solely on these asset classes risk missing a key piece of the puzzle: alternative investments.

Two of the most powerful and often overlooked alternative asset classes are infrastructure and real estate. For business owners seeking diversification, income, and inflation protection, these areas deserve serious attention.

Alternative Investments: Why Infrastructure Matters

Infrastructure isn’t just highways and bridges. It’s the systems that make modern life possible, including:

  • Power grids and utilities
  • Telecommunications and data centers
  • Water and waste systems
  • Renewable energy networks

In the U.S., many of these systems were built during the post-World War II era and are now in dire need of reinvestment.1 The federal government has committed funding through programs like the Infrastructure and Jobs Act and the Inflation Reduction Act, but these cover only a fraction of what’s needed. The American Society of Civil Engineers recently gave U.S. infrastructure a C− grade — an improvement from a D but still far below where it needs to be.2

For investors, that funding gap represents an opportunity. Large institutions already allocate about 8% of their portfolios to infrastructure, compared with less than 1% for the average individual investor. That imbalance is beginning to shift.

The Investment Case for Infrastructure

Infrastructure investments have several qualities that make them attractive for business owners:

  • Lower volatility – Backed by long-term contracts and monopolistic trends (like utilities)
  • Reliable income – Cash flow typically tied to usage fees (e.g., utility bills, tolls, airport fees)
  • Inflation protection – Many contracts linked to inflation indexes such as the Consumer Price Index (CPI)
  • Diversification – Low correlation to stocks and bonds, offering protection in market downturns

Recent trends point to three “mega themes” driving capital into infrastructure:

  1. Digital transformation – Data centers, cell towers, and networks supporting AI, streaming, and global connectivity
  2. Energy transformation – Renewables, nuclear, hydrogen, and technologies modernizing the power grid
  3. Aging infrastructure replacement – Rebuilding roads, bridges, airports, and water systems across the U.S.

Real Estate Beyond the Headlines

Commercial real estate has been under pressure, but not all property types are created equal. High-conviction sectors include:

  • Multifamily housing – Rising demand as home ownership becomes less affordable
  • Industrial logistics – Warehouses, cold storage, and distribution centers tied to the growth of e-commerce
  • Life sciences – Facilities supporting pharmaceutical and medical innovation

Real estate has repriced significantly, down approximately 25% from its peak to its current low over the last three years. For new investors, that represents a more attractive entry point, particularly for those seeking cash flow and tax efficiency.

Strategies for Owners of Appreciated Real Estate

Many business owners and families hold highly appreciated property with a low tax basis. Selling outright could trigger massive tax liabilities. Fortunately, there are strategies to help:

  • 1031 exchanges – Swap one property for another of equal or greater value to defer taxes
  • Delaware statutory trusts (DSTs) – Pool resources into institutional-quality real estate while deferring gains
  • 721 exchanges – Move from a DST into a diversified perpetual real estate investment trust (REIT), deferring taxes indefinitely while gaining diversification and liquidity options
  • Opportunity zones – Reinvest capital gains into designated zones for deferral through 2026 and potential elimination of appreciation taxes after 10 years

These tools allow owners to unlock diversification, professional management, and tax efficiency while avoiding an immediate tax hit.

Create Balance with Alternative Investments

For business owners, wealth is often concentrated — whether in a company, a property, or a narrow set of investments. Infrastructure and real estate offer ways to balance that concentration with assets that are essential, income-producing, and positioned for long-term growth.

These opportunities, once reserved for institutions and the ultra-wealthy, are increasingly accessible to accredited and even non-accredited investors through structures like interval funds and professionally managed trusts.

In a world where volatility, inflation, and uncertainty persist, it may be time to look beyond stocks and bonds. Infrastructure and real estate aren’t just investments — they’re foundational to both the economy and your long-term wealth strategy.

Visit us online or contact us today to explore how alternatives, such as infrastructure and real estate, can strengthen your portfolio.

Sources:

1 Center on Budget and Policy Priorities. It’s Time for States to Invest in Infrastructure. cbpp.org. Mar. 19, 2019. https://www.cbpp.org/research/its-time-for-states-to-invest-in-infrastructure. 

2 We Build Value. ASCE: U.S. Infrastructure Needs $9 Trillion in Investment. Webuildvaluecom. Sept. 4, 2025. https://www.webuildvalue.com/en/infrastructure/us-infrastructure-resilience.html#:~:text=For%20the%20energy%20sector%2C%20the,private%20investments%20planned%20for%20U.S.