Market Commentary

Space market fundamentals can differ markedly across property types

While today’s property market tends to be characterized by supply–demand imbalances, declining/low occupancy rates, and moderating/low rental growth rates, signs of stabilizing fundamentals have started to percolate.

Nareit tracks quarterly investment holdings for the largest actively managed real estate investment funds focusing on REIT investment for insights into expert investor sentiment.

While publicly traded equity REIT performance has recently been exhibiting an inverse relationship with U.S. 10-year Treasury yield movements, this has not always been the case.

The FTSE Nareit All Equity REITs Index posted a total return of 4.2% in February as broader market equities fell, with the Russell 1000 declining 3.2% and the Dow Jones U.S. Total Stock Market falling 3.1%.

FTSE EPRA Nareit indices offer exposure to new and emergent property sectors.

Rising interest rates worry real estate investors. Their fears are rooted in the view that interest rate increases will result in rising cap rates and, all else being equal, declining property values.

REITs are real estate with attractive performance attributes. In research sponsored by Nareit, CEM Benchmarking took a comprehensive look at investment allocations and realized investment performance across 12 asset classes over a 25-year period (1998–2022) using a dataset covering more than 200 U.S public- and private-sector pensions with $4.1 trillion in combined assets under management (AUM).

There is a high barrier to entry to invest directly in commercial property and most U.S. families do not invest in commercial property unless they have significant financial resources, according to data from the Federal Reserve’s Survey of Consumer Finances (SCF).

Investors use Sharpe ratios as a simple measure of risk adjusted return or, put differently, return per unit of risk.

The FTSE EPRA Nareit Developed Extended and Developed Indexes each rose 1.8% in the first month of 2025, led by industrial, timberland, and health care.

Historical data show that, on average, real estate has enjoyed solid total returns across different interest rate regimes with REITs consistently outperforming their private market counterparts.