Cheap Real Estate

Office space is tight and rents are rising, yet REIT shares are scorned. What's wrong?

What's wrong with real estate? Not much, as far as homeowners and commercial landlords are concerned. In much of the country, houses are going for their asking price and office rents are rising faster than inflation. Last year demand for new office space exceeded supply by 35%. Barring a weak economy, fundamentals are likely to remain strong.

So what's wrong with real estate? Plenty. Anyone who sunk money into publicly traded Real Estate Investment Trusts, or REITs, has been scorched badly. Last year the average REIT stock sank 17% while the Standard & Poor's 500 soared 27%, and REITs' dismal showing...

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