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REIT recovery gives way to expansion as income returns regain appeal
Principal Asset Management’s Rich Hill said the expansion phase for markets typically lasts around 12 years and has more to do with underappreciated income than price gains.
Principal Asset Management research leader Rich Hill said the REIT market’s shift from recovery into expansion is an important signal for where broader commercial real estate could be headed. Speaking on the REIT Report podcast, Hill pointed to gains in REITs during 2026 as evidence that predictable earnings and income driven total returns are becoming more attractive again after being out of favor for several years, according to Nareit.
Hill said the cycle should be viewed through a longer time horizon, arguing that market expansions usually last around 12 years. He attributed the longevity not just to price performance, but to income returns that he said have been underappreciated.
The strategy chief also cautioned that commercial real estate should not be treated as one single asset class, saying it is instead made up of multiple subsectors. He added that new and differentiated real estate opportunities could encourage investors to reassess whether commercial real estate belongs in their portfolios.
Hill said he expects both public and private real estate to do well in the next phase, and he described REITs as income producing vehicles that own or finance real estate across a range of property sectors. He also noted that REITs generally aim to deliver total returns tied to steadier dividend income and long term capital appreciation, with relatively low correlation to other assets, Nareit said.