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 Volatilities, Sharpe Ratios, Beta & Alpha, and Diversification Benefits as of the Beginning of 2017
The diversification benefits of exchange-traded Equity REITs relative to the non-REIT parts of the stock market have persisted throughout a long period encompassing an almost unfathomly severe downturn—yet they have almost never been stronger than they were as 2016 came to a close.
Positive Signs for REITs: Commercial Real Estate Ends the Year on Solid Note
The data show positive fundamentals entering the New Year. Supply remains in check, and demand growth is sustained, despite some bumps along the way.
REIT Correlations in 2017
While the factors that drive Equity REIT returns are always somewhat different from those driving the returns of non-REIT stocks, the differences between the two equity asset classes—real estate and non-REIT stocks—have rarely been more different than they are as of the start of 2017.
REIT Returns as of the Beginning of 2017
A below-standard year for exchange-traded Equity REITs was still better than their counterparts in the illiquid real estate market, while a stunningly successful year for exchange-traded Mortgage REITs wasn’t all that out of the ordinary.
How Are Equity REITs Positioned for Higher Interest Rates?
How well are stock-exchange listed Equity REITs positioned for the interest rate environment ahead?
Renter Nation? Rising Home Ownership Gives Some Competition to Multifamily REITs
The apartment market has been riding a wave of robust demand and rapidly rising rents for the past several years, pushing multifamily into the leading ranks of commercial real estate. Recently, however, there have been some signs of softening.
Understanding the Term Structure of Correlations
One of the most important investment metrics is the term structure of correlations between any two assets. Correlation measures the degree to which the returns for a pair of assets move together.
The Surprising Comparison of Diversification Benefits from U.S. REITs and International Assets
The bedrock of any investor’s portfolio—no matter how small, no matter how large—is an allocation to the broad U.S. stock market. To go just the tiniest step further, most investors start with a mix of U.S. stocks and U.S. bonds. The question is what to add to that basic portfolio.
Using REIT Yield Spreads to Make Tactical Investment Decisions
As of the end of September 2016 the average dividend yield for stock exchange-traded Equity REITs was 3.70%. That’s extremely low by historical standards: in fact, the average Equity REIT yield has been greater than 3.70% nearly 90% of the time stretching all the way back to the beginning of 1972.
Soft Jobs Numbers Pose Downside Risks to Real Estate, REITs
What happens if “two steps forward, one step back” turns into “two steps forward, two steps back”?
Not Your Grandad’s REIT: Pictures of an Evolving REIT Industry
The REIT industry has evolved as it has expanded, and looks quite different today than it did a generation ago.
Growth of REIT NOI: Signs of a Maturing Sector
Total NOI of stock-exchange listed Equity REITs has nearly tripled over the past ten years, to more than $20 billion each quarter since mid-2015.