The Market Commentary blog on reit.com presents analysis of the macro- and micro-economic fundamentals impacting the REIT and commercial real estate industry. The Nareit economics team offers their commentary on the state of the market, the outlook for commercial real estate and breaking macroeconomic news. The opinions set forth here are solely those of its author(s), and do not necessarily reflect the views of the Nareit or its membership.
Demand for Rental Housing Posts Record Increase in 2014
The fundamentals for the apartment sector are rapidly improving as the job market recovery gains momentum. Demand for rental housing surged in 2014, with the total number of occupied rental units increasing by 2 million units (first slide). This is a record increase in rental occupancy, according to Census Bureau data beginning in 1965, surpassing by a wide margin the previous record rise in rental occupancy of 1.5 million at the onset of the housing crisis in 2007.
REITs Among Few Bright Spots In The Stock Market During January
Listed U.S. REITs returned +7.53% during January 2015 according to the FTSE NAREIT All REIT Index, which measures the total returns (stock price appreciation plus dividend payments) of all REITs traded on major stock exchanges in the U.S. In contrast, the broad U.S. stock market suffered a decline at -1.47% according to the Dow Jones U.S. Total Stock Market Index. Small-cap value stocks—sometimes mistakenly considered similar to REITs—did even worse at -2.11% according to the Russell 2000 Value Index, while large-cap stocks also underperformed at -1.73% according to the S&P 500 Index.
Commercial Property Update 2014:Q3
Sustained above-trend job growth is having a broad impact on commercial property markets. Demand for rental housing has accelerated this year, allowing the apartment sector to absorb a significant increase in new supply with little impact on vacancy rates.
Challenges and Opportunities for Commercial Real Estate in 2015
The outlook for commercial real estate markets and REITs has continued to evolve as the overall macroeconomic recovery matures. It is important to keep in mind just how much the momentum has changed. Two years ago, for example, the consensus outlook among the economists surveyed by the Wall Street Journal anticipated job growth averaging 160,000 per month. In January 2015, this panel expected job growth of 230,000 per month. It is certainly good news that after several years of disappointments, the economy finally appears to be hitting its stride.
Economic Update (May 18, 2012)
Economic Update (May 30, 2012)
Economic Update (July 6, 2012)
Economic Update (August 1, 2012)
Economic Update (August 16, 2012)
Commercial Property Update 2012:Q2 (August 3, 2012)
Commercial Property Update 2012:Q3 (November 6, 2012)
Economic Update (December 13, 2012)