Commercial real estate continues to provide a solid hedge against inflation, a trend that has been borne out over multiple decades during periods when inflation has exceeded 4%, says Carly Tripp, global chief investment officer and head of investments for Nuveen Real Estate.
Speaking on the REIT Report, Tripp noted that Nuveen research shows that compared to other asset classes, commercial real estate was the only one that emerged with an overall net positive return during those inflationary periods.
“We always say real estate is an inflation hedge, and we're seeing that play through right now. So it's a good time to be in commercial real estate in my opinion,” Tripp said.
Tripp also said that the current inflationary environment has not bled into increased rental income for landlords. Instead, the increased rental income by and large has been a result of “incredibly strong demand.”
Elsewhere in the podcast:
- Tripp said she generally sees less of a willingness on the part of investors and developers to start new projects today. That is a result of a more tepid response from lenders, as well as the unpredictability of costs, as well as the shortage of labor.
- Fundamentally speaking and operationally, “we just continue to see incredible demand within the industrial space. I do think the supply chain issues exacerbate that demand and will continue to support the sector going forward.”
- Short-term rentals will become a more efficient market, acting as a potential disruptor to not only hotels, but office usage as well.
- Office usage across the UK and Europe is still “really high” versus the U.S. “We're still seeing a lot of demand, both from an investor's perspective and from a tenant perspective in our office holdings there.”
- Large retail centers across China, meanwhile, have done “incredibly well.”