Corner Insights – Why REITs Are Back – And Why This Rally Has Legs

REITs can continue to outperform because improving property fundamentals, a persistent public-private valuation gap, and attractive income are supporting the rally even as interest rates remain high.

• The FTSE Nareit All Equity REITs Index returned 14.5% year-to-date through August, outperforming the broader U.S. equity market.
• Rental housing demand is strengthening as new supply slows, retail small-shop occupancy is at record highs, hotels are posting mid- to high-single-digit RevPAR growth, healthcare benefits from aging demographics, and data centers are seeing record leasing driven by AI and digitization.
• JLL data indicates that 2026 completions will fall well below the 2021–25 peak across office, industrial, residential, and retail properties in North America, supporting lower vacancy and stronger pricing power.
• Public REITs still trade below private-market values in several sectors; Veris Residential’s take-private deal implied a low- to mid-5% cap rate versus about 6.2% in the public market, while rental housing, office, hotels, and shopping centers remain the most discounted according to CenterSquare.
• REITs offer a 3.6% dividend yield versus roughly 1% for the S&P 500, even though the U.S. 10-year Treasury yield rose nearly 60 basis points in 2026 through August; U.S. REIT equity multiples also began the year nearly 22% below historical relative levels.

Takeaway: The rally is presented as a fundamentals-and-valuation re-rating rather than a rate-cut trade, giving investors exposure to income, diversification, and potential private-market arbitrage, although the opportunity to buy quality real estate at a discount may narrow.