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.
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.
The Evolving Real Estate Landscape and REIT Indexes
Over the past 10 years, we have seen dramatic changes in the composition of REIT equity market capitalization.
REIT Property Acquisition Activity Heats Up
Acquisition activity in the second quarter was robust across most property sectors.
REITs Show Largest Weekly Gain Since Early March
Last week’s increase brought the year-to-date return to 32.0%.
Jobs Recovery and Return-to-office Slowed by Delta Variant
Total payroll employment rose 235,000 in August, the slowest since last January and far behind the monthly average of 636,000 between January and July.