Key Issue for U.S. REITs Remains Job Creation

9/9/2011 | By Matthew Bechard

At the European Public Real Estate Association's (EPRA) annual conference in London earlier this month, NAREIT President and CEO Steven A. Wechsler spoke with EPRA's Steve Hays for a series of joint interviews. Wechsler addressed the status of the U.S. REIT market as well as gave his thoughts on the European real estate market and discussed the collaborative relationship between NAREIT and EPRA.

"The U.S. real estate market, like real estate markets anywhere in the world, are dictated very much by the greater macro economic picture. In the United States today, coming out of the Great Recession, we are experiencing slow growth," Wechsler said. "The real estate economy is coming back from the recession, but coming back slowly."

Wechsler said the U.S. real estate market has been buoyed by limited new construction across most property sectors in recent years, which has enabled property companies to satisfy demand and in some cases begin to have some pricing power.

The key issue for REITs and real estate investment generally in the United States, according to Wechsler, is the key issue for the broader economy: employment. "The real estate economy is driven very much by employment levels and growth in employment. Therefore, the focus on job creation going forward is very important to REITs and real estate investors generally," Wechsler said. "As employment numbers rise, real estate markets throughout the U.S. will get stronger and stronger."

Looking at the global real estate investment market, Wechsler said he has been impressed by the resilience of interest over the past several years in investing globally in real estate.

"Increasingly, U.S. investors are looking at real estate opportunities on a global level, including Europe. We are seeing institutional and individual investors moving toward diversifying globally and that the presence of REITs in markets across the globe are a big plus in terms of U.S. real estate investors being able to access real estate globally in a manner familiar to them," Wechsler said.

NAREIT and EPRA have cooperated for several years on a number of levels and key initiatives. One of the initiatives that cements that cooperation is the partnership in the FTSE EPRA/NAREIT Global Real Estate Index.

"It has provided a context and structure for investors to understand the global opportunity set that exists today in listed real estate securities," Wechsler said.

The two associations are also very active working together, along with other members of the Real Estate Equity Securitization Alliance, on global accounting and financial standards initiatives.