The Market Commentary blog on reit.com presents analysis of the macro- and micro-economic fundamentals impacting the REIT and commercial real estate industry. The Nareit economics team offers their commentary on the state of the market, the outlook for commercial real estate and breaking macroeconomic news. The opinions set forth here are solely those of its author(s), and do not necessarily reflect the views of the Nareit or its membership.
Return-To-Office Rebounding After Delta Variant Slowdown
The return-to-office of employees who have worked from home during the pandemic is rebounding, after a pause during the Delta variant surge of COVID-19.
REITs Rose Last Week
Last week’s increase raised the year-to-date returns above 30%, to 30.2%.
Robust Rebound Lifted REITs Last Week
Last week’s gain, which came after five consecutive weeks of downward moves, brought year-to-date returns to 27.1%.
Disappointing September Jobs Report Suggests Pause in Return-to-Office
Many of the 19.6 million employees who continue to telecommute because of the pandemic are likely to return to the office in the first half of next year.
REIT Share Prices Little Changed Last Week
REIT share prices were little changed last week, with the FTSE Nareit All Equity REITs Index total return edging down 0.3%.
Real Estate and REIT Allocations in Sector Specialist Funds
The large specialist ownership base for REITs can help investors in direct and indirect ways.
Most REIT Sectors Moved Lower Last Week
Broader markets also fell, with a decline of 2.2% on both the Russell 1000 and the S&P 500.
Active Managers Increasing Allocations to Real Estate and REITs in Generalist Funds
The REIT underweight for generalist funds benchmarked against the S&P 500 declined from 114 basis points in 2016Q4 to just 62 basis points as of 2021Q2.
New Morningstar Analysis Shows the Optimal Allocation to REITs
Multiple studies conducted by different research firms have come to similar conclusions, finding that the optimal portfolio allocation to REITs may be between 5% and 15%.
REITs Edged Lower Last Week
REITs edged lower last week, with a total return of -1.0% on the FTSE Nareit All Equity REITs Index.
REIT Returns Flat Last Week
REITs edged narrowly lower for the week ended Sept. 17th, but outpaced other equities.
REITs Retreated Last Week
REITs remain well into positive territory for 2021, however, with year-to-date returns of 26.6% on the All Equity REITs Index.