Barclays Remains Constructive on Industrial Sector

Ross Smotrich, managing director at Barclays, participated in a video interview during Nareit’s CEO Forum & Advocacy Day at The Hay-Adams hotel in Washington, D.C.

Smotrich said there is “no question” that industrial REITs have benefited from tremendous tailwinds, evident by their double-digit returns over the last few years. He said strong supply and demand dynamics and positive investor sentiment have been drivers of this growth.

Smotrich said that one of the challenges for maintaining growth in the industrial sector will be whether fundamentals continue to favor the landlord. “We tend to believe they will, but it is getting more challenging late in the cycle,” he said, noting that Barclays remains constructive on the industrial sector.

Turning to the retail sector, Smotrich said Barclays is optimistic.

“There’s no question that retail is challenged and it’s changing,” he said. “But some of the better retailers are figuring out how to be merchants again [and] how to remain relevant.”

Across the broader REIT industry, he said investor sentiment is likely mixed.

“You have to look at the various constituencies and what they are thinking,” Smotrich said. “The variable to look at is the 40 percent of investors [who] are the generalists, the non-dedicated financial buyers. It’s fair to say that their sentiment over the last several years has been very mixed.”