NCREIF: CRE Returns Softening

Headquartered at Chicago’s Aon Center, NCREIF says Q1′s declining rate of return continued a trend.

CHICAGO—Returns on commercial real estate continued moderating in the first quarter, the National Council of Real Estate Investment Fiduciaries said Monday afternoon. However, Chicago-based NCREIF noted that while returns were weaker in Q1, CRE fundamentals remained solid, while investment sales volume on properties within the NCREIF universe was up by double digits year over year.

For Q1, the total return on the NCREIF Property Index was 2.21%, down from 2.91% in Q4 2015 and 3.09% for Q3 of last year. Longer term, NCREIF says that the annual appreciation return edged downward in Q1 after strengthening over the course of ’15, while Q1’s annual income return, the lowest for any four-quarter period since the NPI was launched, continued a gradual decline seen over the past five years. Q1’s annual total return was 11.84%, below the five-year average of 11.93% but well above the 7.61% average for the past 10 years.