In a recent webinar hosted by Nareit and Bloomberg Intelligence on January 23, industry experts shed light on the future of the REIT sector in 2025. Moderated by Bloomberg Intelligence analysts Jeff Langbaum and Lindsay Dutch, the discussion featured insights from John Worth of Nareit, Gina Szymanski from AEW, and Rick Romano from PGIM Real Estate.

John Worth began by reviewing REIT performance in 2024, highlighting a positive 4.9% return, though below the historical average. Specialty real estate emerged as the top-performing sector, with industrial and telecommunications lagging. The capital markets saw significant issuance, amounting to $87 billion. Worth is optimistic about the sector’s prospects in 2025, citing low leverage and steady access to capital as benefits.

Rick Romano and Gina Szymanski elaborated on their strategies for 2025, noting the persistence of high Treasury rates and prospects for sustained REIT earnings growth. They also discussed potential interest rate volatility and its implications for portfolio management.

Valuation trends were another focus, with Szymanski predicting a potential 20% decline in private appraisal values if current Treasury levels persist. Romano highlighted opportunities for REITs in case of declining private valuations.

Examining specific property sectors, Romano and Szymanski found industrial valuations improved yet still costly. AEW maintained neutrality on the office sector amid challenges in achieving high occupancy. In New York City, the first signs of recovery are appearing.

For health care real estate, Szymanski foresees continued recovery due to strong demand and limited supply. Data centers could experience 10% annual rent growth due to supply-demand imbalances, and AEW is increasing exposure to the Sunbelt region, anticipating a growth resurgence despite supply issues.

In the realm of mergers and acquisitions, Romano anticipated broad privatization opportunities in 2025. Worth noted a trend toward REIT consolidation, which helps achieve scale, reduce capital costs, and enhance tenant solutions.

Viewers can register here to watch the webinar on-demand for further insights.