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.
Property Values Recover Strongly In March, Up 3.3% During First Quarter
Property values nationwide increased 5.6 percent in March as measured by the FTSE NAREIT PureProperty Index Series. The strong recovery in March more than made up for a weak January and tepid February, sending property values up by 3.3 percent during the first quarter of 2016.
Economic Fundamentals and REITs: JOLTS Data Show Continued Labor Market Strength
The January release of the Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics last week provides additional evidence that the labor market continues to tighten despite concerns about financial market volatility and weak foreign economic growth.
Commercial Mortgage Outlook: Flooding or Drought Ahead?
Commercial mortgages are to the real estate market like rainfall is to a farmer. Too little rain and the crops dry up, but too much and floods can destroy the fields. In commercial real estate, too little credit and business is stifled, but too much debt can lead to speculation, overbuilding and defaults.
New Data On REITs Show Stable Price Multiples And Record Occupancy Rates, But Slowing Acquisitions
REITs Deliver Solid Operating Results in 2015:Q4
REITs delivered solid gains in operating results in 2015:Q4. Funds From Operations (FFO) of All Listed U.S. Equity REITs rose nearly 10% from a year ago, to $12.2 billion, and Net Operating Income (NOI) increased 13.2% over this period. Dividends paid by All Listed U.S. Equity REITs and Mortgage REITs increased 5.1% over 2014:Q4. Total dividends paid for the year as a whole increased to nearly $45 billion.
Property Values Gained Slightly in February
Investment real estate values grew by +0.44% percent during February 2016 according to the FTSE NAREIT PureProperty® Index Series, which provides the earliest measurement of changes in the market values of properties held for investment purposes.
Strong Demand for Commercial Real Estate Carries Into 2016
Strong and growing demand for commercial real estate in 2015 carried into the new year. Commercial property transactions totaled $139 billion in January, up 15.3% over January 2015. Indeed, the CRE market appears to have gained momentum recently, as total sales over the past three months were 22.2% above the prior three months.
Early Warning Signs of Recession? Recent Reports and the Outlook for REITs
The outlook for REITs and commercial real estate depends critically on sustained improvements in economic fundamentals. What are the risks that a recession is on the horizon?
What Accounts for REITs’ Relative Performance vs S&P 500 During the Recent Stock Market Turbulence?
The total return on listed Equity REITs since stock market volatility spiked higher last August is 500 bps higher than the total return on the S&P 500. Moreover, REITs performed better than seven of the 10 headline Sectors according to the S&P/MSCI Global Industry Classification System (GICS®)
Commercial Property Update 2015:Q4
Economic fundamentals for REITs and real estate continue to improve. GDP growth slowed in late 2015, but mainly reflecting a decline in energy exploration and in export markets; domestic sectors supporting real estate remain firm.
Does the GDP Slowdown in Q4 Reveal Cracks in the Foundation for REITs?
Has Volatility Reared its Ugly Head Again? No, Not Really
I’m sure you’ve seen the headlines about market volatility, including “No Calm in Sight as Volatility Surges from Stocks to Bonds” (Bloomberg, 1/18/16), “What To Do with the Market’s Volatility” (Fox Business, 1/19/16), and “Why The Stock Market Is Volatile, Why Volatility Hurts, And What To Do About It” (Forbes, 1/16/16). Just how bad is it? Look behind the headlines and you’ll find that volatility has really not been that bad, especially for REIT investors.