- REITs maintained higher or comparable occupancy rates to private real estate across all major sectors except industrial, where both posted over 95% occupancy.
- REITs currently offer more favorable cap rates than their private market counterparts, indicating better value for investors.
- Higher REIT occupancy rates may reflect superior management, asset selection, and operational focus.
- The largest cap rate spread (191 bps) was seen in the apartment sector, highlighting it as a particularly attractive area within public markets.
Public Real Estate Offers a Competitive Edge
As investors look for value during the Black Friday season, REITs are presenting a strong opportunity. Compared to private real estate held in ODCE funds, Nareit reports that public REITs are showing better performance and more favorable pricing.
In Q3 2025, REITs outperformed ODCE funds in occupancy across apartments, office, and retail. Notably, retail and office posted the largest advantages, with REITs ahead by 4.7 and 4.5 percentage points, respectively. In contrast, industrial REITs trailed slightly by 0.1%. However, both public and private industrial properties reported exceptionally high occupancy rates above 95%.
This performance may be due to REITs’ sharper operational focus. Additionally, stronger asset management and better property selection could be contributing factors.
Cap Rate Spreads Highlight Discounted Public Market Pricing
Besides higher occupancy, REITs also offer more attractive pricing. For every major property type, REITs had higher implied cap rates than private ODCE assets. These spreads suggest public real estate may be undervalued.
Specifically, the apartment sector showed the widest spread at 191 basis points. Office followed at 121 bps, then industrial at 94 bps, and retail at 79 bps. Although private markets tend to lag public markets in price discovery, these gaps indicate that REITs may offer better returns at current prices.
Interestingly, recent fundraising trends show that private REITs continue to pull in significant capital—outpacing public counterparts—which may reflect investor appetite for yield even as public REITs remain discounted.
Moreover, the pricing advantage makes REITs especially appealing for value-seeking investors. Apartments, in particular, stand out as an attractive entry point.
Why It Matters
REITs provide access to high-quality, institutional-grade properties in prime locations. They are managed by best-in-class operators. With stronger or comparable occupancy rates and more attractive pricing, REITs offer a compelling alternative to private real estate.
Furthermore, investors benefit from liquidity, transparency, and diversification—advantages not easily found in private market investments.
What’s Next
As the pricing disconnect between public and private real estate continues, more investors may look to REITs for value. If operational performance remains strong and discounts persist, REITs could see increased capital inflows.
According to market data, the current environment may offer a rare opportunity. For investors seeking long-term value, REITs are well-positioned to deliver solid returns at a lower entry cost
Bottom Line
For real estate investors focused on fundamentals and price, REITs present a timely opportunity. With strong occupancy, better pricing, and professional management, they remain a smart bet in today’s market.
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