Market Analysis & Research

Rising interest rates worry real estate investors. Their fears are rooted in the view that interest rate increases will result in rising cap rates and, all else being equal, declining property values.

REITs are real estate with attractive performance attributes. In research sponsored by Nareit, CEM Benchmarking took a comprehensive look at investment allocations and realized investment performance across 12 asset classes over a 25-year period (1998–2022) using a dataset covering more than 200 U.S public- and private-sector pensions with $4.1 trillion in combined assets under management (AUM).

There is a high barrier to entry to invest directly in commercial property and most U.S. families do not invest in commercial property unless they have significant financial resources, according to data from the Federal Reserve’s Survey of Consumer Finances (SCF).

Investors use Sharpe ratios as a simple measure of risk adjusted return or, put differently, return per unit of risk.

The FTSE EPRA Nareit Developed Extended and Developed Indexes each rose 1.8% in the first month of 2025, led by industrial, timberland, and health care.

Historical data show that, on average, real estate has enjoyed solid total returns across different interest rate regimes with REITs consistently outperforming their private market counterparts. 

REITs posted positive returns to begin 2025 as the FTSE Nareit All Equity REITs Index rose 1.0% in January.

GRESB, the Global Real Estate Sustainability Benchmark, has released its 2024 data on environmental stewardship, social responsibility, and good governance for real estate. 

U.S. REITs raised $12.5 billion from secondary debt and equity offerings in the fourth quarter of 2024.

Specialty, data centers, health care REITs led returns in 2024.

In November, the FTSE Nareit All Equity REITs Index gained back most of the ground lost in the previous month, posting a total return of 3.5%.

A recent Nareit commentary examined occupancy rate momentum across the four traditional property types and found that property fundamentals have generally been soft or softening across these sectors.