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AEW researcher says high rates make real estate income growth key

AEW’s Mike Acton said yields are at their highest in at least a decade and many assets trade below replacement cost, though the setup is not broad based.

Reported · Written up by our desk · REITs

AEW’s Mike Acton, head of research and strategy at the firm, said that with interest rates staying high, the next couple of years for real estate will center on income growth, driven by fundamental property investment and active asset management, according to the REIT Report podcast.

Acton said that approach means selecting the right property in the right location, controlling expenses, keeping properties occupied, being disciplined about capital expenditures, and timing sales, rather than taking risk aimed at yield compression.

He added that the current market offers a potential entry point, citing that yields are the highest they have been in at least a decade and that most assets trade below physical replacement cost, while also noting the opportunity is not broad based.

Acton also highlighted senior housing as a standout area of investor interest, pointing to about 70 million baby boomers moving toward the age bracket for senior housing, while flagging ongoing challenges around affordability and delivering options for different income levels.

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