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Real estate should focus on income growth as rates stay high, AEW says

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

Reported · Written up by our desk · REITs

AEW head of research and strategy Mike Acton said real estate’s near term focus should be on income growth as interest rates remain high and likely stay that way for some time, according to the REIT Report podcast.

Acton argued the income growth approach depends on fundamental property investment and asset management, including selecting the right properties by location, controlling expenses, keeping assets occupied, managing capex, and having the discipline to sell when appropriate.

He said those priorities amount to “old school” real estate skills, not a strategy that relies on taking risk and hoping for yield compression.

Acton also highlighted senior housing as a standout segment, driven by about 70 million baby boomers approaching ages suitable for the sector, while noting ongoing challenges such as affordability and the need to offer options across different income levels.

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