CNSREIT-AR-2024 Final - Flipbook - Page 6
Open-air shopping centers (classi昀椀ed as “strip centers” by NCREIF)
have now outperformed other private sectors for the second
consecutive year. This has been consistent with our view that last
cycle’s winners (notably, multi-family apartments and industrial) were
likely to give way to last cycle’s laggards, such as shopping centers, that
would rebound due to undervaluation and favorable supply/demand
dynamics (Exhibit 1).
That is a stark contrast from nearly a decade ago, when talk of the retail
apocalypse dominated news headlines. But reports of physical retail’s
death were greatly exaggerated.
The pace of new retail shopping center construction has remained the
lowest of any major property type. In 2008, more than 120 million
square feet of new shopping space was built. Construction rapidly
declined over the following two years (in the wake of the global 昀椀nancial
crisis) and then remained low, bottoming in 2022 with only 昀椀ve million
square feet delivered (Exhibit 2).
EXHIBIT 1
Last cycle’s laggards have become this cycle’s emerging leaders
NCREIF Property Index (NPI) – Levered Total Return(1)
Industrial outperformed
for nine years straight
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
–13.6%
CBD
Office
–32.6%
Strip
Center
51.9%
Apt.
32.0%
Apt.
18.4%
Apt.
19.1%
Strip
Center
20.5%
Indust.
22.2%
Indust.
18.6%
Indust.
18.5%
Indust.
19.3%
Indust.
18.1%
Indust.
16.9%
Indust.
66.1%
Indust.
24.2%
Indust.
–2.1%
Strip
Center
6.8%
Strip
Center
–16.9%
Indust.
–37.6%
Indust.
30.8%
CBD
Office
27.4%
Strip
Center
18.2%
Strip
Center
18.6%
Indust.
17.9%
Strip
Center
20.9%
CBD
Office
12.2%
Strip
Center
8.3%
Apt.
8.3%
Apt.
7.6%
CBD
Office
–0.1%
Apt.
36.9%
Apt.
10.0%
Apt.
–6.5%
Indust.
1.1%
Indust.
–17.0%
Strip
Center
–40.9%
CBD
Office
17.6%
Indust.
24.8%
Indust.
16.2%
Indust.
15.7%
Apt.
17.8%
CBD
Office
20.8%
Strip
Center
10.4%
Apt.
8.0%
CBD
Office
7.8%
CBD
Office
6.7%
Apt.
–1.3%
CBD
Office
10.1%
Strip
Center
5.4%
Strip
Center
–17.3%
Apt.
–2.4%
Apt.
–19.5%
Apt.
–46.8%
Apt.
14.7%
Strip
Center
24.8%
CBD
Office
13.4%
CBD
Office
15.5%
CBD
Office
16.4%
Apt.
18.6%
Apt.
7.6%
CBD
Office
7.0%
Strip
Center
4.6%
Strip
Center
3.6%
Strip
Center
–7.9%
Strip
Center
3.9%
CBD
Office
–13.4%
CBD
Office
–46.2%
CBD
Office
–30.5%
CBD
Office
Strip centers are emerging as a leader after lagging
At December 31, 2024. Source: NCREIF, Cohen & Steers.
Data quoted represents past performance, which is no guarantee of future results. The information above does not reflect information about any fund or account managed or serviced by
Cohen & Steers, and there is no guarantee that investors will experience the type of performance reflected above. There is no guarantee that any historical trend illustrated above will be repeated in
the future, and there is no way to predict precisely when such a trend will begin.
(1) Private Real Estate sector returns represented by the NCREIF Property Index (NPI) – Levered Total Return. Levered returns capture the performance of properties that have debt whereas unlevered
properties are excluded. As a result, we use the NPI index rather than the ODCE index to mitigate sample size bias. For instance, levered ODCE returns for strips only include 37 of 233 properties included in
the index whereas levered NPI returns include 1,050 properties.
6
COHEN & STEERS INCOME OPPORTUNITIES REIT
