By Ryan Luby, Henri Torbey, and Brian Vickery
CREIF apartment returns of 3.9 percent in the second quarter exceeded all sectors with the exception of industrial real estate, which saw a shift from brick-and-mortar to online shopping that has reverted back to the prepandemic trend (Exhibit 1). The apartment sector has now returned 24.4 percent over the trailing 12-month period (Exhibit 2). Appreciation accounted for 76 percent and 82 percent of apartment returns in the quarter and over the trailing year, respectively. Net operating-income growth has been the predominant driver of appreciation over the past year, while capitalization rates started the 12-month period at 4 percent, fell to a decades-long low of 3.8 percent at year end, and expanded to 4.3 percent in the second quarter, according to Green Street.
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