A report from CIBC Capital Markets in June 2022 pointed to the fact that REITs seem well-positioned to withstand rising rates well into 2026 for a few reasons, which include the way REITS tend to structure their debt (and being subjected to potentially higher rates each year) and the ongoing return to pre-pandemic operational activity.
Meanwhile, Global real estate services firm Jones Lang LaSalle Inc., in its Q2 real estate outlook, predicted that different segments of the REIT universe would hold up better than others if the economy takes a turn.
“Both industrial and retail are expected to remain resilient to softening economic conditions as the year wears on,” the report said. “Office, however, is expected to experience a delayed recovery from COVID-induced occupancy losses.”
The outlooks came after a generally strong quarter across the board.
On the retail side, as landlords continue to adapt to the realities of post-pandemic life, they are looking for new ways to bring value to their tenants, which include sharing data and offering more diverse experiences.
Companies are seeking to help retailers reconfigure their stores and environments as shopping preferences shift. This includes evolving retail spaces, drive aisles in parking lots, signage and even loading flows. With these tactics, commercial real estate companies are confident it can withstand any turbulence inflation might inflict on the retail sector.