Market Commentary

With everyday life upended by the coronavirus for the foreseeable future, the commercial real estate industry is shifting on a daily basis.

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

Nareit estimates 86.6 American adults, or 44% of American households, own REIT stocks directly or indirectly through mutual funds, ETFs or target date funds.

Rising GDP and the job growth that goes with it are the most important determinants of demand for real estate, as businesses need more office space for workers and industrial space to produce, store and ship goods.

From 2016 to 2018, the jobs equivalent contribution from REITs is up an estimated 19.0%.

A moderate supply of new buildings is helping to keep vacancy rates low and reduces risks of a market downturn due to excess construction in the months and years ahead.

Compared against broad market benchmarks, REITs outperformed the Dow Jones U.S. Total Stock Market by 1.4 percentage points, large cap S&P 500 by 1.3 percentage points, and the small cap Russell 2000 by 4.47 percentage points in January 2020.

The FTSE Nareit U.S. Real Estate Index Series posted positive total return performance across all property sectors in 2019.

In 2019, completed and pending mergers and acquisitions of U.S. REITs declined to $25.9 billion.

Equity REITs raised $3.4 billion in the third quarter of 2019 through at-the-market programs, just shy of a record high.

REITs were first deemed eligible for inclusion in the S&P 500 in October 2001.

Today’s economic environment has no historical precedent. What markers can we rely on as the economy and commercial real estate move into uncharted waters?