The return for institutional investors as measured by the NCREIF Property Index (NPI) was 1.51 percent in the second quarter, down from 1.80 percent the previous quarter. The return for this quarter was slightly below the average quarterly return over the past four quarters, which was 1.59 percent or 6.52 percent annualized. This is an unleveraged return for what is primarily “core” real estate held by institutional investors throughout the United States.

The total return of 1.51 percent consisted of an income return of 1.12 percent from NOI and a capital return of 0.38 percent. The positive capital return indicates that on average, properties in the NPI are still increasing in value after deducting capital expenditures that have been added. Thus, the commercial real estate market as reflected by the NPI has not yet peaked as some thought may have happened the previous quarter.

Returns for all the property types except retail were up slightly for the quarter. But r