Calvin Schnure

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.

What happens if “two steps forward, one step back” turns into “two steps forward, two steps back”?

The REIT industry has evolved as it has expanded, and looks quite different today than it did a generation ago.

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. 

The biggest question for the apartment sector lately has been whether the bulging pipeline of new supply would swamp the pent-up demand that accumulated during the Great Recession. Indeed, rental demand flagged during the winter as construction reached new highs, feeding worries about the outlook.

Demand continues to exceed supply in real estate markets, leading to lower vacancies, rising rents and accelerating NOI. There are few signs of any meaningful slowdown ahead. 

Equity REITs significantly expanded their holdings of income producing real estate in recent years, buying a total of $260 billion of commercial property between 2011 and 2015. 

A record number of investors, analysts and media attended REITWeek 2016 in New York to meet with management teams and check the pulse of the industry. Here are several key takeaways from this year’s conference.

The recovery in commercial real estate markets for the past several years has been uneven and often disappointing, much like the economy as a whole. More recent news, however, shows a turn for the better—and also signs that conditions may continue to improve.

Financial markets have been troubled by a decline in corporate profits. Earnings per share of the S&P 500 fell 7.6 percent in the first quarter of 2016 compared to last year, prompting a drop in equity prices and concerns about the outlook. But trends are going the other direction in real estate.