Real estate investment trusts have been reluctant to build in recent years, a caution that helped prop up property values and extended the market cycle, according to a new report from Fitch Ratings.
“Throughout this postcrisis cycle, REITs have demonstrated discipline, as the sector has navigated an environment of historically low-cost debt capital, record high commercial real-estate values and good liquidity positions,” the report notes.
The Wall Street Journal reported that REITs have learned from the 2008 crisis, when costly development projects got some firms into trouble. They now tend to avoid office construction because of lackluster employment growth.
There are some noteworthy exceptions. SL Green Realty, for example, is developing the $3.2 billion office tower One Vanderbilt in Manhattan and Boston Properties is building the $1 billion Salesforce Tower in San Francisco. [WSJ] — Konrad Putzier