Property Sectors Green Street "Loves" Released in Honor of Valentine’s Day
Green Street, the preeminent provider of commercial real estate intelligence and analytics, has released its list of the Property Sectors Green Street Loves. Green Street’s research team regularly compares private-market, discounted cash flow (DCF) return expectations for 17 commercial property sectors, which drives the ranked list through its proprietary sector allocation framework.
Just recently, Green Street also initiated formal coverage of the ground lease sector via Safehold (SAFE), which is not included in this analysis but will be part of its sector allocation spanning 18 property types moving forward.
The research team analyzes four factors to arrive at the list of return expectations for each sector: nominal cap rates, cap-ex, NOI growth and risk adjustments, and volatility.
The manufactured housing sector tops this year’s list, with a private-market DCF expected return of 7.3%, an impressive 50 basis points higher than any other property sector on Green Street’s list. Following manufactured housing are the gaming and single-family rental (SFR) sectors, both of which feature private-market return expectations of 6.8%.
Here’s a list of the top 5 property sectors Green Street loves:
- Manufactured Housing – 7.3%
- Gaming – 6.8%
- Single-Family Rental – 6.8%
- Cold Storage – 6.7%
- Health Care – 6.7%
According to Green Street's U.S. Sector Outlook reports, returns are before fees, which are lower for public vehicles. Other risk is primarily obsolescence from a shift to zero emissions (if not captured in cap-ex), but also includes items such as: property outside the U.S. and lease-default risk.
Green Street’s list of property sectors with the highest private-market return expectations are included in its 2022 U.S. Sector Outlooks, a series of expanded research reports highlighting new real estate opportunities in a post-pandemic environment.
The forward-looking reports offer comprehensive insight on operating fundamentals and property valuations for apartment, single-family rental, industrial, office, mall, strip center, and self-storage properties. Green Street publishes a similar ranked analysis of European property sectors, which are also available in the four new 2022 Pan-European Sector Outlooks.
For a full list of Green Street’s favorite property sectors based on its proprietary private-market sector allocation framework, or for more information on the 2022 Sector Outlooks, contact us today or request sample U.S. reports here.
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