In the second quarter of 2025, the real estate investment trust (REIT) landscape continued to evolve against a backdrop of shifting macroeconomic conditions and investor sentiment. Global REITs posted modest gains, buoyed by resilient equity markets and stabilizing interest rate expectations. The Fed’s decision to hold rates steady amid mixed inflation signals provided some relief for rate-sensitive sectors, although volatility persisted due to geopolitical tensions and trade-policy uncertainties Non-US REITS outperformed US REITs because US exceptionalism lost some of its luster due to policy uncertainties and a weakened US dollar.
The data center segment recovered from a challenging first quarter to become a top performer, supported by strong demand fundamentals and continued artificial-intelligence-driven infrastructure investment. Retail REITs saw mixed results, with open-air centers outperforming malls as consumer spending patterns shifted. Office REITs continued to face headwinds—particularly in urban cores—though select Sunbelt markets showed signs of stabilization. Residential REITs benefited from tight housing supply and steady rent growth, especially in suburban and secondary markets. Transaction volumes remained subdued, but green shoots are emerging. Several REITs accessed the capital markets opportunistically, taking advantage of improved equity valuations and narrowing credit spreads. Private capital interest in real estate debt and preferred equity continues to grow, particularly in transitional assets. REITs with strong balance sheets and sector-specific tailwinds are well positioned to navigate the second half of the year. We remain focused on fundamentals, on disciplined capital allocation, and on identifying opportunities in which public market valuations diverge from private market realities and in which we are seeing increasing rates of rental growth like in the self-storage and apartment sectors.
REITs do not sit in the forefront of the tariff storm— unlike other recent market turmoils such as the COVID-19 pandemic or the global financial crisis. Investors can look to REITs in this environment to potentially provide predictable cash flows driven by defensive demand characteristics and limited supply additions in 2026 and 2027 to likely provide ample growth.
