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.
Are REITs’ Negative Price Response to Interest Rate Increases Justified?
REIT share prices have often responded negatively to rising interest rates, at least since 2013. Is this warranted by the outlook for their future earnings?
2018 Return Expectations for REITs
For REIT investors 2017 turned out to be a very normal year—but that was a huge disappointment given the “irrational exuberance” that investors in some other parts of the stock market enjoyed. So how can we develop empirically-based REIT return expectations for 2018?
Are You Worried About Inflation?
Concern is growing among some investors that tight labor markets may trigger an increase in price inflation.
What to Watch in the Economy and Real Estate Markets in 2018
The macroeconomy and real estate markets had a good performance in 2017. That may well continue into 2018, but there are several risks that might cause a change in the outlook.
Cap Rates Hold their Ground as Interest Rates Move Higher
Cap rates have been holding their ground, even as interest rates move higher. The resilience of pricing in the real estate sector should not be surprising, however, given the strength in the fundamentals that support demand for commercial space.
Enjoy Some Steady Income with Your Price Appreciation
One of the enduring mysteries of reporting on investments is how many people seem to focus on price appreciation OR income, and how few people focus instead on total return
REIT Balance Sheets as Solid as Ever
REITs have steadily fortified their balance sheets, leaving the industry in as solid a financial position it has ever seen, based on more than two decades of data available.
FFO of all REITs Declined in Q3, but Firm Fundamentals Point to Future Growth
The fundamentals for the REIT industry remain firm, which gives us some confidence that the recent decline in FFO is a short-term dip amidst a longer-term trend of mostly solid growth.
Commercial Property Update: Apartment Markets Led the Way in the Third Quarter
The apartment market led the way among commercial property markets in the third quarter, as robust demand pushed down the national vacancy rate and supported rent growth.
This May Be the Time to Hedge Your Private Real Estate Portfolio
Pricing in the private real estate market has become more inflated, relative to REIT valuations, than at any time since 2007.
Commercial Property Prices: Froth, or Fundamentals?
Commercial property prices have risen steadily since the beginning of the recovery from the Great Financial Crisis. Continued price gains, however, at some point begin to raise warning flags.
REIT-Stock Correlations by Property Type: A Sharp Decline
The correlation between REITs and the broad stock market has always been relatively low because REIT returns are driven by the real estate market cycle whereas returns for most other equities are driven by the much shorter business cycle.