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REIT stocks experienced a brief surge after President Donald Trump’s election, but that boost has reversed as investors worry about rising interest rates and a potentially peaking commercial real estate market.
The S&P U.S. REIT Index rose 4.2% last year but is down 1.3% this year, a marked distance from the S&P 500’s 6.9% current growth rate, the Wall Street Journal reports. Some sectors of the REIT market are faring worse than others, and retail REITs are especially troubled as thousands of stores close in response to e-commerce and shifting consumer trends.
Though retail REITs are feeling the pressure amid these nationwide closures, some of the country’s biggest retail REIT CEOs told Bisnow in March their biggest challenge is not filling their anchor vacancies, but rather convincing investors their businesses are not floundering.
Even industrial REITs, which posted a 31% total return last year, are showing signs of slowing as warehouse construction ramps up.
Not all REIT sectors are experiencing weak performance this year. So far data center REITs are winning, the WSJ reports, as tenants race to boost their capacity to host more online traffic.
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