Market Commentary

Market interest rates typically increase during periods when macroeconomic conditions are strengthening, the same strengthening that often drives positive REIT investment performance.

The sustained rise in prices of commercial real estate over the past seven years has prompted questions whether valuations may be getting ahead of themselves.

Economic fundamentals continued to support the real estate markets.

Now that we are on the other side of the Wall of Maturities, it’s worth a look back to see how the market fared, and what are the prospects for the CMBS market in the year ahead.

We decided to turn the tables and ask investors and other readers of the Nareit News Digest for their views on what will have the greatest impact on REIT share performance in 2018.

REIT share prices have often responded negatively to rising interest rates, at least since 2013. Is this warranted by the outlook for their future earnings?

For REIT investors 2017 turned out to be a very normal year—but that was a huge disappointment given the “irrational exuberance” that investors in some other parts of the stock market enjoyed. So how can we develop empirically-based REIT return expectations for 2018?

Concern is growing among some investors that tight labor markets may trigger an increase in price inflation. 

The macroeconomy and real estate markets had a good performance in 2017. That may well continue into 2018, but there are several risks that might cause a change in the outlook.

Cap rates have been holding their ground, even as interest rates move higher. The resilience of pricing in the real estate sector should not be surprising, however, given the strength in the fundamentals that support demand for commercial space.

One of the enduring mysteries of reporting on investments is how many people seem to focus on price appreciation OR income, and how few people focus instead on total return