Commercial real estate is on a roll. What do we see ahead?

Rising interest rates don’t have to be a roadblock for REIT performance

Time to read: 3 min

Real estate is hot. As the US economy has continued to gain steam, residential developers have benefited from the migration of educated professionals and millennials into large urban areas. Investment in upscale multi-family housing has been especially robust over the past few years. Often overlooked, however, is the performance of commercial real estate.

Commercial real estate an important driver of REIT performance

Although high-profile residential projects generate many of the headlines, commercial real estate activity has also been clipping along at a steady pace. Investors in real estate investment trusts (REITs) have reason to cheer this trend, as commercial real estate has been the primary driver of REIT prices over the past 12 years. This is evident in the chart below, which plots commercial real estate prices against REIT performance.


Tapping into the growth of emerging market water infrastructure

Expanding the world’s access to clean water could present investment opportunities

Boccellari_Thomas_sm_lowrezAuthor’s note: In 2015, I blogged about a growing shortage of fresh water in many parts of the world and how some companies are providing much-needed water infrastructure in these areas. Given continued strong interest in water-related investments, I believe this information bears repeating. – Tom Boccellari

While we in North America tend to take fresh water resources for granted, fresh water is an increasingly scarce commodity in other parts of the world. There is a fixed amount of water available worldwide, with 97.5% of it in the form of salt water unfit for human consumption.1 Of the remaining 2.5%, more than two-thirds of it is frozen in ice caps.1 The world’s population now stands at roughly 7.3 billion, and is expected to grow by a third to 9.7 billion by 2050.2 The United Nations estimates that only 1% of the world’s fresh water supply is accessible enough to meet the needs of a rapidly expanding world population.2

Water demand increasing with population growth