The third quarter has brought more uncertainty, not less, for commercial real estate, and it has been reflected in the valuations of publicly traded property owners. 

Real estate investment trusts have seen share prices pummeled this year, especially office REITs, which have reported sluggish leasing and higher operating costs during the recent earnings season. Even industrial and multifamily REITs, which have fewer demand issues, have lost on average more than 8% of their value this year after dropping heavily last year, according to Nareit.

“I would say the biggest takeaway out of earnings this quarter was uncertainty. There's just a lot of uncertainty among pretty much all asset classes,” BMO Capital Markets Senior Analyst John Kim said on this episode of Bisnow Reports. “If you look at the forward curve, it's not really coming down as steeply as it did a couple of months ago. And so, in that environment where interest rates are higher for longer, we don't know what the values of some of these companies are.”

Kim said he isn’t ready to say REIT stocks have hit their bottom and said that recovery for some of the lagging parts of the industry could drag well into 2025.

Bisnow’s audio series, Bisnow Reports, examines every facet of the international commercial real estate industry — from the murky future of retail and office to real estate’s reckoning with diversity to the effects of climate change on the built world, and so much more. You can subscribe on Apple Podcasts, Spotify and Amazon Music, or click below to listen in your browser.