Commercial real estate may be out of favor, but it might also be one of the few fairly priced asset classes left, The Wall Street Journal writes.
After years of falling values, institutional investors still aren’t rushing back—even after five Fed rate cuts since fall 2024. Pension funds and insurers have tiptoed in, becoming net buyers for the first time in three years, yet deal activity remains far below normal as offices and apartments sit 36% and 19% below their peaks. With private credit, data centers and infrastructure delivering stronger returns, property has to fight harder for capital.
But cracks are forming in the cold shoulder.
Real estate stocks are the cheapest they’ve been relative to U.S. equities in two decades, and opportunistic investors are scooping up major office assets at steep discounts. If the AI trade cools—or bursts—commercial property could shift from pariah to safe harbor.