Representing $525.3 billion in market value, the quarterly NCREIF Property Index (NPI) total return has moderated for two years as the real estate cycle has matured. The total return was 1.73 percent in fourth quarter 2016, down from 1.77 percent in the previous quarter and 2.91 percent in fourth quarter 2015. For each quarter of 2016, the quarterly total return has been below its 20-year average.

The fourth-quarter 2016 total return consisted of a 1.14 percent income return and 0.59 percent appreciation. The income return has trended lower through most of this cycle, with property values rising faster than income as the recovery began, followed by slower quarterly income gains as fundamentals stabilized. Appreciation experienced a steeper downward trend in 2016, with three consecutive quarters of appreciation below 1 percent, and a fourth-quarter capital return at one-third of the rate returned in the same quarter a year ago.

The 2016 annual NPI total return, at 7.97