After a rally and a rate hike, what’s next for listed REITs?

Listed REITs can continue to outperform through the end of 2026 and into 2027 because they are early in a multi-year recovery cycle, fundamentals are improving and their diversification value is rising.

• REITs gained 12% through September 15, 2026, despite higher interest rates, suggesting they are not driven solely by rate movements.
• Second-quarter results indicate accelerating property cash-flow growth, while easing supply pressures are improving the outlook for industrial and apartment REITs.
• Data centers benefit from accelerating hyperscaler capital spending; local moratoriums linked to power and water concerns could constrain future supply and support rents for existing facilities.
• Senior housing fundamentals remain strong because demographic demand is increasing while new supply is not expected to rise meaningfully for several years; office markets are also gaining momentum as return-to-office trends strengthen and AI-related employment fears fade.
• REIT valuations remain several turns below their historical average relative to the S&P 500, while concentrated equity valuations and higher stock-bond correlations make diversification more valuable.

Takeaway: Investors have not necessarily missed the REIT rally, but the thesis depends on continued cash-flow acceleration, moderating rate headwinds and sustained demand in data centers and senior housing.