U.S. commercial real estate produced its highest return for 2017 during the fourth quarter, according to the National Council of Real Estate Investment Fiduciaries (NCREIF). The NCREIF Property Index posted a total return of 1.80 percent for the fourth quarter, the highest quarterly total of the year. The figure was up 10 basis points from the third quarter return of 1.70 percent and higher than the 1.73 percent total recorded for the fourth quarter 2016.
For the 12-month period, the index fashioned a total return of just under 7 percent, which is a reflection of an unleveraged return for primarily “core” U.S. real estate held by institutional investors in the United States.
The fourth quarter 2017 total return consisted of a 1.16 percent income return and 0.63 percent appreciation. Over the past four quarters, both components of the total return have been relatively stable with the quarterly income return ranging from 1.14 percent to 1.16 percent and appreciation falling in the range of 0.40 percent to 0.63 percent.
Industrial was the top-performing property type during the fourth quarter with a total return of 3.28 percent and also led the pack on an annualized basis with a return of 13.07 percent. Office properties produced the second best total return during the final three months of the year (1.65 percent), followed by apartments (1.62 percent), retail (1.27 percent) and hotels (0.96 percent).
