07/29/2019 | by

Cedrik Lachance
Director of REIT Research
Green Street Advisors

"REITs with great balance sheets will be best positioned to do well in the coming years, especially if we navigate stormier economic seas. Numerous REITs across virtually all property sectors have learned lessons from the past and positioned themselves to not only survive, but to take advantage of volatile environments.

At the sector level, data center REITs are in a unique position to flourish given the continued technological evolution that is creating a secular demand boom in data storage and connection.

Additionally, the single-family rental (SFR) business should experience outsized rent growth and fully take control of expenses. With a demographic tailwind from millennials entering the years in which they’ll have kids and a limited pace of new single-family housing development, the SFR business should do especially well over the next five years.”

Bob O’Brien
Vice Chairman and Global
Real Estate Sector Leader
Deloitte

"Data centers present the biggest opportunity because of extreme demand growth. Increasingly connected technology is generating new sources of data and creating immense data storage demand. Companies are moving their information technology applications to the cloud—in other words, moving their data from servers located in their own facilities to large cloud service providers, who are the largest tenants of data centers.

Everything is becoming digitized. Yes, the space needed to store a byte of data continues to shrink rapidly, but at a fraction of the growth rate of the data being generated and stored. Data center development and operations are technically complex, requiring a deep understanding of tenant power, bandwidth, and security needs, but for those with the expertise to play in this space, there is significant opportunity.”

Diane Wade
Principal, Senior Analyst, Americas
CBRE Clarion Securities

"The gaming sector offers a compelling opportunity over the next five years, especially as we are late in the overall economic cycle, late in the property cycle for many of the REIT sectors, and in an uncertain political climate.

The leases are longer term with no capital expenditures, and, in most cases, are structured as cross-collateralized master leases for additional protection. We expect solid external growth as the sector is still ripe for consolidation, and we see a continued opportunity for cap rate compression to drive gaming REIT net asset values higher. The dividends are well covered and provide above average yields.

In addition, the regional gaming industry tends to perform well on a relative basis during cycle downturns.”