Market Analysis & Research

Gross domestic product surpassed expectations in the first quarter, and strong job growth in March and April provide a favorable backdrop for demand for leased commercial space.

While correlations between stock markets in the United States and China, and the rest of Asia and Europe have risen as trade disputes have heated up, REITs’ correlations with overseas markets have moved lower.

Rising house prices have raised concerns about whether another speculative bubble is brewing. In today’s housing markets, however, it is a scarcity of housing supply that is pushing up prices.

Real estate markets softened in the first quarter, with the demand for leased space slowing for most major property types. Demand did not fall but the weakness may reflect a cautious environment during the winter months.

A generation ago, most commercial real estate consisted of a building and four walls that provided space and services for tenants. Today, however, a growing share of real estate supports the high-tech sector.

Do we need to worry that equity REITs are carrying too much debt?

The relationship between REIT returns and long-term interest rates has turned positive again.

REIT earnings slowed a bit in late 2018, according to the Nareit T-Tracker®, which showed funds from operations (FFO) of all listed equity REITs of $15.9 billion.

The outlook for REITs and commercial real estate remains favorable, despite some mixed macroeconomic news in the early months of this year.

One of the most critical issues for real estate investors in the year ahead is the outlook for cap rates and property prices, especially with Federal Reserve policy in the spotlights. In addition to the future path for their target for short-term interest rates, Fed officials have also been discussing policy options concerning their securities holdings.

REITs have delivered a long-term total return to investors that generally matches and often beats broad market aggregates.

Commercial property prices edged higher in 2018, increasing 1.8 percent over one year earlier.