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.
Senior Housing Occupancy Stable in Q3 Amid Building Boom
The senior housing business is in the midst of a building boom the likes of which we have not seen for a couple of decades.
Valuation Metrics Remain in Bullish Ranges
Whether what you’re looking to purchase is simply the steady income typical of REITs and Treasuries or the broader performance and diversification benefits of the real estate asset class, the “price” for purchasing those investment return attributes through listed equity REITs is especially favorable now.
Listed REITs and Non-REIT Stocks: A Comparison of Total Returns, Volatilities, and Correlations
An investment performance comparison between listed equity REITs and the rest of the U.S. stock market—segmented by sector or by style—highlights the long-term diversification benefits of the listed equity REIT market.
Data Center REITs: Hosting the Cloud, Here on Earth
Data centers house the servers and network equipment that make modern communications possible, including the Internet and data transmitted by cell phones.
Update on Commercial Mortgage Lending: Not Too Hot, but Not Too Cold Either
Excessive debt growth is a warning sign of an overheating real estate sector. Growth of commercial mortgage debt has been modest, however, at only half the pace of the prior cycle. Banks have been the mainstay of lending, but life insurers have shown increased appetite for commercial mortgages, and net issuance of CMBS turned positive in the second quarter.
A Comparison of U.S. and Global REIT Returns
Investments from listed property companies in emerging markets have been especially strong over the past year, according to the FTSE EPRA/NAREIT Global Real Estate Index Series. Over longer historical periods, however, risk-adjusted returns from listed U.S. equity REITs have outpaced those from listed real estate in both emerging markets and non-U.S. developed markets.
How Will Apartment REITs be Impacted by New Construction?
Vacancy rates are likely to remain low as adult members of shared households eventually strike out on their own. However, that the process may take longer than anticipated.
Looking Carefully at the Current Real Estate Market Cycle
The current bull market for exchange-listed equity REITs has rewarded investors with returns averaging more than 21% per year over the past 8½ years—but by the standards of previous real estate market cycles this one has not even hit its stride yet.
Construction Activity Begins to Slow, Boosting the Outlook for REITs and Real Estate
REITs and other owners of commercial properties are likely to benefit from a favorable balance of supply and demand in the months ahead.
How Do Market Interest Rates Affect REIT Returns?
An increase in interest rates might be cause for concern if it were predicted to come with no accompanying increase in net operating income—but it’s those changes in net operating income, not the interest rates themselves, that should attract the closest attention of investors in any equity asset such as real estate.
Income and Capital Appreciation from Real Estate Investing: The Participation Trophy and the Performance Record
There’s little difference between the income earned by the largest, most sophisticated investors in private equity real estate and the income earned by the smallest individual investors in listed equity REITs.
Mortgage REITs Combine Current Income, Long-term Total Return and Portfolio Diversification
Mortgage REITs are an investment in real estate finance that combine high current income with long-term total return and portfolio diversification. MREITs have delivered a 21.2 percent total return over the past year, outpacing most other investments over this period.