Market Commentary

The economic forces that affect the demand for domestic U.S. commercial real estate differ from those affecting global corporations, and stock returns reflect these differences.

One of the more common ways to describe the outlook for REITs is to pick which inning of a ballgame corresponds to today’s REIT market. For the past several years, most observers have said the market was in the seventh or eighth inning.

Earnings remained positive for REITs into 2019, with FFO totaling $16.5 billion in the second quarter.

The economy is returning to its trend growth after getting a boost from the 2017 tax cuts.

For all the hand-wringing six months ago, the first half of the year turned out pretty well for commercial real estate markets and REITs.

Nareit economist Calvin Schnure reviews the latest data on supply and demand conditions, and vacancy rates and rent growth.

REITs have extended overall debt maturities and reduced leverage over the past decade, and access the commercial paper market from a position of balance sheet strength.   

The occupancy rate at apartment REITs has continued to move to new record highs during this building boom.

Nareit completed its third annual round in estimating the size of U.S. commercial real estate, and find that the total dollar value in 2018 was $16.0 trillion, with lower and upper bounds of this estimate of $14.4 to $17.0 trillion.

REITs have made important changes over the past decade in their overall leverage ratios, as well as the composition and structure of their debt.

Nareit was part of a TRIA roundtable in Kansas City on May 31.

Funds from operations of all Equity REITs increased to $15.9 billion in the first quarter, according to the Nareit T-Tracker. Occupancy rates remain near the record highs set last year.