Chart: The Big CRE Reset

TopdownCharts
08-04 08:51

The US Commercial Real Estate (CRE) market has just been through its third major correction in 40 years. Indeed, the 2020’s downturn has been similar in magnitude to the early-90s downturn and 2008 crisis.

But a couple of interesting things stand out.

First, those other two major corrections in the commercial real estate market sowed the seeds for decadal booms (a possibility that is completely out of mind for most investors as sentiment on real estate remains deeply pessimistic).

The other point of interest is that the bottom looks to already be in, and prices are stabilizing and ticking up again... While there may still be risks, this is the type of thing investors should pay particular attention to, and is exactly the type of setup I hunt for in my work at Topdown Charts.

Bonus Chart: REITS on the Rise

Meanwhile if we look at US REITs there is a very bullish technical setup. US REITs have made an initial breakout against a major overhead resistance level.

This is particularly interesting in the context of the previous chart.

It’s also interesting to see resilience in REITs despite rising rates, and interesting to see this bullish price picture set against record low allocations by investors to REITs.

And then you think about the cheap relative valuations for REITs + prospect of rotation flows into underowned sectors like REITs as AI/Big Tech leaders turn to laggards.

Hence this overlooked and underestimated sector is well worth a second look.

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  • Investing Leon
    ·08-04 18:00
    The key question is whether this marks the start of a broad CRE recovery or a highly uneven, sector-specific rebound. Lower valuations and underweight positioning create a compelling setup for REITs, but office fundamentals, refinancing pressure, and higher-for-longer rates remain important risks. The strongest opportunities may therefore be in segments with durable cash flows—such as data centers, logistics, residential, and healthcare—rather than in CRE as a whole.
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