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NCREIF: CRE Generates Highest Returns Since Q2 2016
Returns for the second quarter of 2018 were the highest since Q2 2016, according to the just-released National Council of Real Estate Investment Fiduciaries’ (NCREIF) second quarter 2018 report. The NCREIF Property Index (NPI) total return was 1.81% in the second quarter, up slightly from 1.70% last quarter.
The average quarterly return over the past five years was 2.38%, or 9.85% annualized. Although the current quarter’s return of 1.81%, or 7.44% annualized, is down from the torrid pace during the previous five years, the downward drop in returns that were witnessed for several years stopped at the beginning of 2017 and returns have held remarkably steady since then, writes NCREIF.
Industrial properties continue to be the stellar performer, with a return of 3.58% for the quarter. A distant second was hotel at 1.95%, followed by office and apartment, which were tied at 1.54%. Retail recovered nicely from 0.72% last quarter, to 1.32% for the current quarter.
Key NCREIF findings:
- Occupancy increased to a new 16-year high, at 93.75%, which is up slightly from 93.5% last quarter.
- The highest occupancy was for industrial properties at 96.73%. The second highest was retail at 92.82%.
- Rent growth turned positive again this quarter, after having been negative Q1 2018.
- Cap rates increased to 4.94% for the nation, up from 4.86% the prior quarter.
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