- Alex Pettee, CFA
Industrial REITs: Not Tired Of Winning
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Since the start of 2016, no major real estate sector has outmatched the performance of industrial REITs, outperforming the broader REIT index by a cumulative 45% during this time.
Outside of Amazon, industrial REITs have been perhaps the biggest beneficiaries of the continued growth in e-commerce and the rabid “need for speed” among goods distributors and logistics operators.
Among real estate sectors, industrial REITs have been most impacted by the positive economic surprises since the start of 2016, aided by corporate tax reform, deregulation, and trade policy.
A common theme over the past several years, however, valuations remain lofty. Given the large pipeline, the sector remains more exposed than most to an unexpected economic downturn.
For now, it’s full steam ahead. Rents grew another 8% in 2018 according to Prologis as demand once again outpaced supply, the ninth consecutive year of a positive demand imbalance.
