How much of an institutional pension fund's portfolio is typically investing in real estate?

It is estimated that institutional pension funds in the United States typically have about 5% to 10% of their assets allocated to real estate investments, primarily commercial real estate. That estimate may be somewhat low, however, for two reasons. First, some calculations of pension fund investments only include direct investments in real estate; they do not include equity shares of real estate companies' stocks. Second, pension fund managers have indicated an increased desire for real estate investments in the low-interest-rate environment following the 2008 financial crisis. This desire is further fueled by indications that prices in the residential sector and commercial real estate sector have bottomed out and are beginning to rise.
Investments in real estate by pension funds might well be substantially larger if the majority of pension funds were not too small to have sufficient investment capital for direct investment in large commercial real estate projects. Nonetheless, pension fund investments continue to grow, as real estate is increasingly viewed by fund managers as representing a very favorable risk-adjusted return on investment. Additionally, real estate is seen as an inflation hedge. The current low yields available on bonds are another factor driving fund managers toward increased asset allocation to real estate investments.

Pension funds are a very important factor in the overall investment market, as they make up the largest part of institutional investments. As of 2014, they are estimated to account for nearly 40% of professionally managed assets, and their combined holdings add up to over $10 trillion in total investment capital. Pension funds in the United States are governed by the Employee Retirement Income Security Act, or ERISA, of 1974. In the past, pension fund managers have often seen real estate as mainly a high-potential, capital-appreciation investment. That view has recently become augmented with a perspective on real estate as a steady income-producing asset.

Culled from Investopedia