Market Commentary

U.S. REITs raised $6.2 billion from secondary debt and equity offerings in the third quarter of 2022, down from $11.1 billion raised in the second quarter.

Nareit’s annual update of REIT property counts and estimated gross asset values by state and property sector is now available on the REITs Across America website.

In September, REITs and stocks posted their worst monthly performance since March 2020, as a hawkish Federal Reserve warned that measures to bring inflation under control could bring “some pain” to U.S. financial markets, and Treasury yields continued to rise.

REITs supported an estimated 3.2 million fulltime equivalent (FTE) jobs in the U.S. in 2021, producing $229 billion in labor income, according to EY’s latest Economic Contribution of REITs report, commissioned by Nareit.

The average office occupancy rate rose almost 4% in the week after the holiday.

A new Morningstar Associates analysis, sponsored by Nareit, found that the optimal portfolio allocation to REITs ranges between 5% and 18%.

Recent data from CoStar highlight some of the supply and demand differences across sectors. In the second quarter of 2022, demand continued to outstrip supply for both industrial and retail, while apartment and office demand fell short of their respective supply counterparts.

A preview of the institutional investor survey by Wealth Management’s Real Estate division (WMRE) showed institutional investors are looking to newer property types, such as data centers, life sciences, and medical offices to drive returns in their portfolios.

The U.S. economy has faced numerous headwinds over the last few years.

The FTSE Nareit All Equity REITs Index posted a total return of -5.9% and the FTSE Nareit Equity REITs Index fell 6.0% in August.

In the second quarter of 2022, continued solid fundamentals reflect an ongoing healthy demand for commercial real estate across most sectors, even as concerns about a slowing economy dominate the outlook.

REITs have seen a large increase in investor interest in ESG with greenhouse gas emissions (GHG) and climate change top of mind.