NAREIT Commercial Property Update 2015:Q1
The apartment sector remains robust, with vacancy rates at 4.2%, a decade-low level that indicates little (if any) excess supply. Renewed vigor in the job market over the past year has spurred household formation and continues to fuel strong demand for apartment rentals. The office sector gained further momentum, bolstered by healthy job growth. Rent growth remains at a 4% annual rate, nearly double the average pace over the last four years. The retail sector remains sluggish. Net absorption fell 16% to its lowest level in six months, as many malls suffered from store closures and tenant bankruptcies.
REITs: Real Estate With a Return Premium
A NAREIT analysis of the performance of publicly traded equity REITs and private equity core, value-added and opportunistic funds over the last full real estate cycle shows REITs outperformed private equity real estate funds over the entire cycle, as well as over the bull market portion of the cycle when value-added and opportunistic funds’ higher leverage would have been expected to deliver superior returns.