The quarterly NCREIF Property Index total return dropped slightly during third quarter 2018, returning 1.67 percent, down slightly from 1.81 percent in the previous quarter. The NPI is an unleveraged return for what is primarily “core” real estate held by institutional investors throughout the United States.

The current quarter’s return of 1.67 percent — or 6.86 percent annualized — is down from the average quarterly return over the past five years of 2.33 percent, or 9.65 percent annualized. It is important to note the downward drop in returns that we witnessed for several years stopped at the beginning of 2017 and returns have held steady since then.

Property sector performance

Industrial properties, which are primarily warehouse, continue to outperform, with a total return in the third quarter of 3.36 percent. The hotel sector followed closely, with a total return of 3.22 percent. Office was third highest at 1.69 percent, followed c