Third quarter REIT industry and sector performance was the focus of the Oct. 7 webinar, “FTSE Nareit U.S. Real Estate Indexes in Review & What’s Next.”
Hosted by Nareit and Institutional Real Estate, Inc. (IREI), the quarterly webinar featured John Worth, executive vice president of research & investor outreach at Nareit, and Keith Bokota, portfolio manager – head of the Americas at Principal Asset Management. Mike Consol, senior editor of IREI’s Real Asset Adviser magazine, moderated the discussion.
Worth kicked off the webinar with an overview of REITs’ performance in the third quarter, noting that total returns for the FTSE Nareit All Equity REIT Index were 2.7% for the quarter, adding that the index has been positive for two out of three quarters this year. He explained that although the index is up 4.5% on a year-to-date basis as of Sept. 30, it is trailing broader equities indices by more than 1,000 basis points, depending on the index.
Worth also highlighted REITs’ performance around the globe; the FTSE EPRA Nareit Developed Index returned 11.3% as of Sept. 30. At the regional level, Developed Asia led (27.9%), followed by Developed Europe (18.9%), and North America (4.9%). “This is a unique year. It’s fairly unusual for the United States not to be the best performing region in the index, and it’s very unique for the United States to be in the third position. Part of that, though, is driven by the dollar’s decline,” Worth said.
In addition, webinar participants shared observations about a wide range of sectors and topics, including:
- Data centers: Attendees noted a disconnect between data center REITs’ underperformance (-9.6% as of Sept. 30) and the continual enthusiasm for the sector. Bokota attributed some of the performance decline to generalist investors pulling back from the market after data center REITs announced new plans for capital expenditures and development to generate long-term growth. “Public investors have a hard time trading near-gain for long-term gain,” said Bokota. Worth also explained that some of the performance could simply be a normalization of returns, given that the sector experienced total returns of 25% in 2024 and 30% in 2023.
- Office: Dynamics in the sector vary by region, according to Bokota. He discussed both the East and West coasts, explaining that while New York has already bottomed, it’s unclear if the West Coast has, even though he is seeing encouraging trends there. Bokota also emphasized the importance of having the right amenity package that will meet the demands of tenants today, which have increased. “A big focus from employers is on return to office, and they’re doing that by elevating the quality of the office product, so that’s where leasing has been the most active,” he added.
- Industrial: In response to an audience question about the sector’s performance, Worth described the year as “quite good,” despite tariff announcements and the supply they’ve been working through over the past few years. “I think it’s a pretty optimistic picture. Supply has slowed down and the sector has been able to keep operational performance up and post positive returns of almost 7% year to date, and that’s in the face of the many challenges this year has thrown at industrial,” Worth said.
- Interest rates: Bokota and Worth agreed that while rate cuts foster stability and positive sentiment, a question remains: Do the short-term rate cuts flow through to the 10-year Treasury? They both noted that a lower 10-year Treasury would help the transactions market, with Worth explaining how it would help close the gap between public and private real estate valuations. Speaking about REITs’ historical performance during rate cutting cycles, Bokota cited research from Principal Asset Management, saying that “REITs have a good track record of outperforming general equities when the Fed is cutting, and in the years following.”
- Property types of the year: For 2025, Bokota said, “We’re pretty optimistic about health care having some legs. We see occupancy above pre-Covid levels, and we still see significant room for occupancy gains in the sector,” he explained. Looking forward to 2026, Worth described why he thinks retail could be interesting. “Operational performance has held up, we’ve seen changing tenant bases across the different sectors of retail, and we haven’t seen a lot of supply come online. If the macro picture is a little less cloudy in 2026 and we see the consumer feeling a bit more healthier, I think it’s a sector where we could see good returns.”
Other topics of discussion included cold storage, multifamily, life sciences, office conversions, financing trends, institutional investors’ use of REITs, and more. Watch the webinar to hear the whole conversation.
The next webinar will be Jan. 13, 2026, and will analyze third quarter performance of the FTSE Nareit U.S. Real Estate Indexes.