Market Spotting: Commercial Real Estate Investment Returns Were Positive in 2015

Proving that real estate is still one of the most solid investments, the National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index posted their highest return since 2011. The 2015 index came in at 13.33% for the year; while the 2011 return was 14.26%. In other good news, the commercial real estate investment appreciation was 8.03% which is the highest return since 2007 when the return was 9.88%.

If there was some concern regarding the good investment return for 2015, investors may choose to be cautious as the fourth quarter cap rate was 2.91% which was down from 3.09% in the third quarter. The 2015 fourth quarter return was also lower than the same time period report in 2014 when the fourth quarter return was 3.04%.

Retail properties had the highest quarterly and the highest yearly appreciation at 3.46% for the fourth quarter and 15.28% for 2015. Right behind retail was industrial real estate which had a 14.87% return for 2015 and 3.19% for the fourth quarter.

Apartments had a fourth quarter cap rate of 2.73% in the fourth quarter while office properties had 2.58% return for the fourth quarter. Office properties showed similar rates through all of 2015 with a yearly return of 12.5%. Hotels properties had a 2015 return of 13.2% and a fourth quarter return of 3.03%.

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