US equity REITs will keep their stable rating outlook next year, in part because of their credit-friendly financial policies, says Fitch Ratings. Also in REITs' favor are good property fundamentals, steady leverage and access to well-priced equity and unsecured debt.
Blackstone Group's Invitation Homes has reportedly filed for an IPO that could come as soon as January, a move that could further establish the single-family home market as a bona fide asset class. Starwood Waypoint Residential Trust and American Homes 4 Rent have already gone public.
Investors have sought REITs for their yield, but share prices are falling as interest rates rise, said Erin Gibbs of S&P Global. "As long as we're seeing interest-rate rises, it's going to be tough for the valuations to expand," Gibbs said.
After enjoying a tremendous run, commercial real estate values will likely remain stable, said Mark Snyderman, a fund manager at Fidelity Investments. Supply and demand are in "reasonable balance overall" and valuation levels are fair, he said.
The class-A industrial sector is on track for its second-best investment sales year since 2008, having posted $31.1 billion in transactions at the end of the third quarter, according to JLL. The sector's vacancy rate fell to 5.8% in the third quarter, a record low, despite added inventory.
A new black winter coat took only 25 days to travel from the drawing board in Spain to the window of Zara's New York City flagship store. Zara parent company Inditex makes 60% of its apparel in Spain and nearby countries, facilitating a speedy and responsive supply chain that keeps Zara's fast-fashion collections fresh.
Cushman & Wakefield reports that Florida office space rents for Class A properties have risen 10% in the past year, with rents averaging $32.26 per square foot. In the Miami-Dade County area, office rents stood at $42.71 per square foot, while Palm Beach County saw an average of $38.38.
Private-prison REIT stocks have boomed since the presidential election. Shares of CoreCivic and Geo Group had fallen after the Obama administration announced earlier this year that the government would phase out use of private prisons.
The real estate sector is in the later stages of a cycle, with growth driven by strong fundamentals and low interest rates, says Morningstar analyst Edward Mui. In this interview, Mui talks about the likely effects of rising rates, trends in retail real estate and technology-related risks.
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