NCREIF Property Index Released

Vacancy and Cap Rates at Historic Lows

CHICAGO, IL, October 25, 2018 – The National Council of Real Estate Investment Fiduciaries (NCREIF) has released third quarter 2018 results for the NCREIF Property Index (NPI). The NPI reflects investment performance for 7,786 commercial properties, totaling $592 billion of market value. The returns are detailed in the attached Snapshot Report.

The total return was 1.67% in the third quarter, down slightly from 1.81% last quarter.  This is an unleveraged return for what is primarily “core” real estate held by institutional investors throughout the US.

The average quarterly return over the past five years was 2.33% or 9.65% annualized.  Although the current quarter’s return of 1.67% or 6.86% annualized is down from the torrid pace during the previous 5 years, the downward drop in returns that we witnessed for several years stopped at the beginning of 2017 and returns have held remarkably steady since then.

NPI Total Returns

The third quarter 2018 total return consisted of a 1.11% income return and 0.56% capital appreciation. 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.

Industrial Continues to be The Leader of the Pac

Industrial properties, which are primarily warehouse, continue to be the stellar performer with a return of 3.36% for the quarter.  Hotel followed closely with a return of 3.22%.  Office was third highest at 1.69% followed closely by apartment at 1.55%.  Retail was again in last place at 0.56%.

NPI Total Returns by Property Type

Return Drivers: Vacancy and Cap Rates at Historic Lows

Occupancy for NCREIF-tracked properties rose to 94.17% which is the highest since the 4th quarter of 2000. The highest occupancy was for industrial properties at 96.94%.  At the same time, cap rates declined to the lowest level in the entire history of the NCREIF Property Index which started in the 1st quarter of 1978.   Cap rates dropped to 4.32% which represents the blended rate at which the portfolio of all NPI properties were being valued.

Despite the 18-year high in occupancy, rent growth slowed for the quarter to about 0.7% compared to 1.54% last quarter. 

About the NCREIF Property Index

The NPI consists of 7, 786 investment-grade, income-producing properties with a market value of $592 billion. The market value breakdown by property type is about 36% office, 24% apartment, 23% retail, 16% 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 Wednesday, November 14th, 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 3Q2018 Snapshot