Headwinds Facing Office REITs

A recent article by Green Street Advisors has a good point about offices in general while providing a picture of the valuation of the office segment:

Source: Headwinds in Office Real Estate: A Sector in Transition

And a Bloomberg chart about the performance of the Bloomberg Office Property Index in the last 12 months as of the close of 10/25:

Source: Bloomberg

The index is at a critical point, attacking the green resistance line. As the office sector is a quite big component of REIT ETFs and Indexes, a break above this trendline could be a game changer.

 

US REIT Premium/Discount to NAV

Optimism vs pessimism regarding different US property segments is clearly visible in the below chart from Green Street Advisors:

Source: Remarkable Signals from the Listed Market

The discounts of the Mall and Strip sectors were obviously driven by the “retail apocalypse”, while the other side of that argument materialized in the premium of the Industrial sector.

 

However, the discount of the Office market and the premium of the Storage are new to me. I guess I have some catching up to do over the next weeks!