Commercial real estate returns turn negative with historical drop in rent

The NCREIF Property Index (NPI) total return was –0.99 percent in the second quarter, which represents a decrease from the 0.71 percent return for the prior quarter. This is the lowest return since the fourth quarter of 2009, which was the midst of the financial crisis that lead to the Great Recession. This is an unleveraged return for what is primarily “core” real estate held by institutional investors throughout the United States. The leveraged returns for those properties in the index that have leverage was –2.76 percent for the quarter because the properties were earning less than the cost of debt.

The NPI reflects investment performance for 8,652 commercial properties, totaling $696 billion of market value.

Second quarter returns are detailed in the Snapshot Report.