NCREIF Property Index Released

Institutional Real Estate Returns Declining but Above Historical Average

CHICAGO, IL, July 25, 2022 – The National Council of Real Estate Investment Fiduciaries (NCREIF) has released second quarter 2022 results for the NCREIF Property Index (NPI). The NPI reflects investment performance for over 10,000 commercial properties, totaling $936 billion of market value. The returns are detailed in the attached Snapshot Report.

The quarterly total return was 3.23% for the second quarter which is down from 5.32% the first quarter but still above the average over the history of the NPI which is 2.25%.  The quarterly return consisted of 0.97% from income and 2.26% from appreciation. Appreciation is after the deduction of capital expenditures.  Market values before considering capital expenditures increased by 2.49% which propelled the index to another historical high.


The 3.23% return is the unleveraged return for what is primarily “core” real estate held by institutional investors throughout the U.S.  Properties with debt financing had a leveraged total quarterly return of 4.06%.  As of quarter-end there were 4,463 properties with leverage and the weighted average loan to value ratio was 41%.  The average interest rate on the leveraged properties rose from a record low of 3.43% the first quarter to 3.73% during the second quarter.

 Returns Decline for all Sectors Except Hotels

Returns for each of the major property sectors declined during the second quarter except for hotels which managed a slight increase from 1.76% to 1.80%.  Industrial properties continued to have the highest return at 5.86%.  Apartment properties had the second highest return at 3.86% followed by retail at 1.68% and office at 0.58%.  The office sector was the only one that had a negative appreciation component of return.

Capitalization Rates

Market value weighted capitalization (cap) rates held steady at 3.73% during the second quarter despite rising interest rates.  This is likely a result of an increase in the growth rate of Net Operating Income (NOI) for the quarter which rose to 4.05%, up from 2.57% the prior quarter.  The future direction of cap rates will depend on whether any further increases in interest rates are offset by continued expectation of growth in property NOI and values.

Press Release