WWith the pandemic pushing for more work-from-home initiatives by employers, commercial real estate may have fallen out of favor, but it could make a comeback.
According to a Wall Street Journal article, a renewed appetite for commercial real estate could develop.
âInvestors bought a record amount of commercial real estate in the third quarter, defying warnings that the Covid-19 pandemic would erode the value of these properties and rob the industry of liquidity,â the article reads. “Instead, purchases of apartment buildings, life science labs, and industrial properties, which serve as e-commerce distribution centers, have boosted commercial sales to over $ 193 billion. in the quarter. That’s a 19% increase from the same three months in 2019, before the pandemic, and the biggest quarter of commercial property sales on record, according to data firm Real Capital Analytics. “
The article noted that strong sales in specific industries in the first nine months of this year were enough to fill the void of declining sales for office buildings and shopping centers. This flies in the face of the norm where sales of office and shopping mall buildings typically do the heavy lifting in commercial real estate sales.
âComing out of Covid we’re actually seeing fundamentals pick up in a handful of sectors and that’s really catching the attention of investors,â said Nadeem Meghji, Americas real estate manager for investment firm Blackstone Inc. .
A balanced approach to real estate
Removing concentration risk can be beneficial when the markets turn bad, which can make an equal weight strategy an ideal option. Invesco offers a number of ETF products that respond to an equal weight strategy, including real estate with the Invesco S&P 500Â® Equal Wt Real Estt ETF (EWRE).
EWRE seeks to track the investment results (before fees and expenses) of the S&P 500Â® Equal Weight Real Estate Index (the âUnderlying Indexâ). The fund will generally invest at least 90% of its total assets in the securities that make up the underlying index.
The underlying index is made up of all components of the S&P 500Â® Real Estate Index, an index that contains the common stocks of all companies included in the S&P 500Â® Index that are classified as members of the real estate sector, such as as defined according to the Global Industry Classification Standard (“GICS”). With an equally weighted index, investors get a good balance of real estate names without one particular title dominating the rest.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.