NCREIF Property Index Released

Returns Down for Quarter Despite Highest Occupancy since Y2K

CHICAGO, IL, July 25, 2019 – The National Council of Real Estate Investment Fiduciaries (NCREIF) has released second quarter 2019 results for the NCREIF Property Index (NPI). The NPI reflects investment performance for 8,289 commercial properties, totaling $653 billion of market value. The returns are detailed in the attached Snapshot Report.

The total return was 1.51% in the second quarter, down from 1.81% last quarter.  The return for this quarter was slightly below the average quarterly return over the past four quarters which was 1.59% or 6.52% annualized.  This is an unleveraged return for what is primarily “core” real estate held by institutional investors throughout the US. 

NPI Total Returns

The total return of 1.51% consisted of an income return of 1.12% from NOI and a capital return of 0.38%.  The positive capital return indicates that on average, properties in the NPI are still increasing in value after deducting capital expenditures that have been added.  Thus, the commercial real estate market as reflected by the NPI has not yet peaked as some thought may have happened last quarter.

Retail Spoils the Party

Returns for retail properties turned negative again during the quarter after seeming to reverse course last quarter.  The total retail return was -0.11%.  In contrast, returns for each of the other property types in the NPI increased for the quarter.  Industrial properties had a return of 3.42%, up from 3.02% the prior quarter followed by office properties that had a return of 1.66% for the quarter which was up from the prior quarter return of 1.64%.  Apartment returns were next at 1.42% versus 1.35% the prior quarter and finally, hotel returns increased from 0.44% last quarter to 1.09% this quarter.

NPI Total Returns by Property Type

Cap Rates at Historic Lows While Occupancy Remains High

Equal weighted cap rates edged up slightly for the quarter from 4.7% to 4.8%.  More relevant to the pricing of the NPI properties, the value weighted cap rate rose from 4.31% to 4.37% which contributed to the drop in the NPI return for the quarter.

Occupancy increased to 94.3% from 93.8% the prior quarter.   This is the highest occupancy since the 3rd quarter of 2000 and was the 8th highest quarter in the history of the NPI.

About the NCREIF Property Index

The NPI consists of 8,289 investment-grade, income-producing properties with a market value of $653 billion. The market value breakdown by property type is about 35% office, 25% apartment, 22% retail, 17% industrial and 1% hotel properties.

The NPI includes property data covering over 100 CBSAs. In addition, within in each property type, data are further stratified by sub-type. These data enhance the ability of institutional investors to evaluate the risk and return of commercial real estate across the United States.


NCREIF will hold a webinar on Thursday, August 15, at 1:00 pm Central Time to discuss an overview of the NCREIF Property Index (NPI) and the NCREIF Fund Index – Open End Diversified Core Equity (NFI-ODCE), the Farmland and Timberland Indices, as well as a detailed discussion of the results and interesting data from the NCREIF Property Value Trends report. The conference call is being webcast live and can be accessed here.  An online replay of the webcast will be available on NCREIF’s website at

The National Council of Real Estate Investment Fiduciaries (NCREIF) is an association of professionals with significant involvement and interest in pension fund real estate investments who come together to address vital industry issues and to promote research on the asset class.

Press Release

NPI 2Q2019 Snapshot