Gina Szymanski, chief investment officer at AEW Capital Management’s global securities business, told the REIT Report that for long-term investors in the REIT market, “there is no better time in the cycle than now,” as historically low levels of supply across all sectors bolster prospects for growth and fundamentals.
“We actually are very bullish,” Szymanski said. “We are sitting at a trough in the cycle. When interest rates started to rise in 2022, it was really pencils down in terms of new development and it took a while for the supply pipelines to empty across the board. But now, really across all sectors, we're sitting at historically low levels of new supply. That will ultimately lead to more pricing power for landlords, and we are seeing green shoots of that,” she added.
Acknowledging that the spread between REIT implied cap rates and the 10-year Treasury has halved since the start of the year, Szymanski emphasized that REITs can still thrive if investors focus on growth sectors, which include senior housing, data centers, and retail.
Szymanski also discussed the often-misunderstood nature of volatility in the REIT market. She argued that volatility should be seen as an asset, not a liability, as it offers opportunities for savvy investors. "Investors have historically paid a premium for illiquidity, but I think that should be the opposite,” she said.