- The Nareit All REITs index beat the S&P 500, year-to-date through July.
- However, no single property classes have outperformed the stock market since the pre-pandemic peak in February 2020.
- Data centers and industrial have been the best performing and office the worst.
- CRE service firms have tracked closer to the NASDAQ, the best performing of all.
- Real Capital Analytics reports price gains for all asset classes through midyear.
The Wall Street Journal recently noted that the FTSE Nareit All REITs index has outperformed the broader stock market in 2021. Total returns including dividends totaled 26.05% through July 31, compared to 17.99% for the S&P 500 index.
The stock market peaked on February 19, 2020. REITs had shown a mixed set of results, and performance differed by asset class, as reported in our previous posts on REIT pricing. So while REITs have been on a general tear in 2021, they still have a ways to go to match the performance of the overall stock market benchmarks since that pre-pandemic peak.
Since February of 2020, the NASDAQ has grown more than 50% (as of August 11), and the S&P 500 more than 31%. No single real estate asset class has posted better results. However, CRE service firms have tracked ahead of the S&P 500, and slightly below the NASDAQ, with 47% gains in that same period.
Within sectors, data centers have been the best performing, up nearly 23% from February 2020 levels. Industrial follows at second with 20% gains, and life science/healthcare third at 8%. The last is a mixed bag, as one REIT is pure life science (Alexandria is up nearly 22% overall), while operators such as Healthpeak and Welltower, which own seniors housing, are still below the pre-pandemic benchmark.
Residential is still off, by about 2%, while retail is still around 4% below February 2020; for example, KIMCO is up 20%, while Simon is 2.5% lower. The laggard is office, which is still down 19%. Prices are up from year-end 2020 levels but are still a ways from their pre-pandemic heights. Compare this to recent stats from Real Capital Analytics showing office transaction pricing growth. This disconnect bears watching.