For now, he said, those interested in the sector should consider shorter duration REITs like hotels or storage facilities.
The Fed will likely raise interest rates this year, Adam and Richardson said, but they don’t expect a string of interest rate hikes.
Adam said there are two reasons he expects the Fed to act on monetary policy this year. “One, I think they want to see what happens,” he said. If the U.S. tips back into recession, the Fed will want to have the option of using normal policy tools like lowering interest rates rather than resorting back to QE.
Second, he said, the Fed will want to start the process of raising rates this year to avoid any potential political implications in 2016, an election year.
The third panelist, Zachary Karabell, head of global strategy at Envestnet, said previously the Fed would rely on economic guideposts like unemployment to act on policy, but added that such signals may not be as useful given the persistent low inflation rates of the past few years.
“We might think that [inflation] rates are being artificially reduced,” he said. “But now that we’re six to seven years into it, when do we think things may be different?”
Given the way the global economy has acted since the 2008 credit crisis, it’s possible that anticipated outcomes based on certain events, such as inflation on economic growth, may need to be reconsidered, he said.
“Expected outcomes may not necessarily be what we thought before,” he said, which is why central banks now depend more on data before they make changes in monetary policy.