REITs and commercial real estate well placed for longer term despite recent volatility

Coming off of one of the strongest years on record, the REIT market is relatively well placed despite the recent volatility. JLL’s Strategic Transactions Monitor details themes driving the REIT market, including a constructive outlook in light of sharply rising rates, an increase in take-private activity and dissipating trends driven by COVID-19.

REITs, along with broader markets, are down 20 percent year to date, driven by growing inflation, Federal Reserve rate hikes and broader geopolitical risks. Though market participants have focused on near-term underperformance, REITs have outperformed on a longer-term basis. Since January 2021, REITs have outperformed the S&P 500 by more than 14 percent, driven by 43 percent total shareholders returns achieved by REITs during the year. Self-storage and industrial sectors led the outperformance, up 59 percent and 45 percent respectively in 2021.

“There is an ever-larger correlation of REIT trading performance with bro