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December 2018 was bitter for investors. Total returns in the broad REIT market were -7.73 percent—but that was good news compared with large-cap stocks (-9.03 percent according to the S&P 500), small-cap stocks (-11.88 percent for the Russell 2000) and especially small-cap value stocks (-12.09 percent).

REITs have generally protected against stock market declines, with downside beta typically well below one; moreover, their upside beta has usually been higher, giving investors a chance to “have it both ways.”

In terms of information about the economy, the retail sales report for December and business inventories report for November were early casualties, as these releases planned for Jan 16th were delayed due to the Census Bureau being shuttered by the lack of funding.

Commercial real estate markets maintained momentum through the end of 2018, as net absorption continued at a high level across major property types.

January was the strongest monthly performance for REITs since October 2011.

Commercial property prices edged higher in 2018, increasing 1.8 percent over one year earlier.

REITs have delivered a long-term total return to investors that generally matches and often beats broad market aggregates.

One of the most critical issues for real estate investors in the year ahead is the outlook for cap rates and property prices, especially with Federal Reserve policy in the spotlights. In addition to the future path for their target for short-term interest rates, Fed officials have also been discussing policy options concerning their securities holdings.

The outlook for REITs and commercial real estate remains favorable, despite some mixed macroeconomic news in the early months of this year.

REIT earnings slowed a bit in late 2018, according to the Nareit T-Tracker®, which showed funds from operations (FFO) of all listed equity REITs of $15.9 billion.

The relationship between REIT returns and long-term interest rates has turned positive again.

Do we need to worry that equity REITs are carrying too much debt?

A generation ago, most commercial real estate consisted of a building and four walls that provided space and services for tenants. Today, however, a growing share of real estate supports the high-tech sector.

Real estate markets softened in the first quarter, with the demand for leased space slowing for most major property types. Demand did not fall but the weakness may reflect a cautious environment during the winter months.

Rising house prices have raised concerns about whether another speculative bubble is brewing. In today’s housing markets, however, it is a scarcity of housing supply that is pushing up prices.

While correlations between stock markets in the United States and China, and the rest of Asia and Europe have risen as trade disputes have heated up, REITs’ correlations with overseas markets have moved lower.