- 2021 REIT price gains were the strongest on record.
- Self-storage posted the strongest gains of all, 74.52%.
- Multifamily led the major property types, with office lagging. Office appears to be offering more value than other asset classes.
- Retail gains were vast in regional malls but more modest in freestanding assets.
- REIT privatization is a trend to watch in 2022. Private equity has never had more capital waiting to be deployed.
The FTSE Nareit All Equity REIT index had its best price return ever in 2021, when growth of 37.29% topped the previous record in 1976. The rebound in REIT valuations has been significant, with key differences among the core asset classes. Multifamily pricing had the strongest performance, growing 58.9%, just ahead of industrial’s 58.51% gains. Retail prices overall grew 45.97%, but with substantial differences between types of centers. Regional mall pricing, for example, increased 83.96%; shopping centers, 59.67%; freestanding malls, a more modest 14.65%.
Hotel pricing grew 18.16%, just ahead of office’s 17.92%. This relative order is closely in line with Real Capital Analytics’ CPPI, which ranks industrial ahead of multifamily for year-over-year price gains through November, followed by retail, hotel, and office. The appreciation discrepancy suggests that investors may pivot back to office in a search for value. PIMCO’s acquisition of Columbia Property Trust points to the increased privatization of office REITs.
Other REIT indexes revealed wide price differences. Self-storage price growth of 74.52% led that of all sectors, followed by specialty (read life science), at 35.61%; infrastructure, 31.56%; timber, 24.71%; data centers, 22.72%; and healthcare, 11.57%.
Download the 2021 REIT Review.