Quick Study: REITs Follow Broader Markets Down in August

In the latest edition of Quick Study, Brad Case, NAREIT’s senior vice president for research and industry information, discussed the difficult market conditions that prevailed on U.S. REITs in August.

The total returns of the FTSE NAREIT All REITs Index dipped 5.7 percent during the month, while the S&P 500 Index lost 6.0 percent.

“August was a very difficult month for investors. There really wasn’t any safe place to be invested,” Case said.

Case noted that REIT investors should concentrate on the long-term benefits of the asset class, rather than focusing on temporary market volatility.

“We’re still in the middle of what I expect to be a strong bull market in the real estate asset class,” Case said. He explained that the real estate cycle is longer than the market cycle for other investments, lasting about 18 years on average. “We’re only about eight-and-a-half years into this bull market,” Case stressed.

He added that supply constraints, demand for space, high occupancy rates and rent growth should benefit the REIT sector benefits in the longer term.

While acknowledging that it was hard to find any bright spots in the market in August, Case emphasized that investing in the REIT market continues to provide diversity in terms of both property type and geographic location.