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Publicly traded real estate investment trusts staging a comeback.
After a bruising 2025 that left much of the sector lagging a stock market dominated by megacap AI darlings, listed real estate has started to claw back investor attention. The rebound is being powered, somewhat ironically, by the infrastructure that underpins the AI boom: data centers.
The FTSE Nareit All Equity REITs index, which tracks 135 REITs, have delivered total returns of roughly 9.2 percent year to date as of Feb. 13, according to data from Nareit. That sharply outpaces a flat S&P 500 and the Dow Jones Industrial Average’s 3.1 percent gain.
It’s a sharp reversal from last year. In 2025, REITs, which tend to be sensitive to high interest rates and broader economic concerns, posted returns of about 1.6 percent, underperforming the border stock market.
Much of that underperformance stemmed from the intense market focus on the top tech and AI stocks, like Nvidia, said Seth Laughlin, head of real estate strategy and research at Cohen & Steers.
Laughlin anticipates that this mindset will subside.
“What we’ve seen thus far in ’26 is this widening and broadening out of economic growth,” he said. “As you see that broadening out of the economy, you are going to see other sectors begin to benefit.”
Data centers tell the story best. They were the worst-performing REIT sector of 2025, with total returns plummeting by more than 14 percent. Investors were focused on getting closer to the “end source” of AI profits by backing firms like Nvidia, Laughlin said. Markets also were spooked by DeepSeek, the Chinese AI model that triggered an AI selloff early in the year.
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Now the trade has flipped. Persistent investor demand and a wave of new construction have helped data center REITs post total returns of nearly 22 percent year to date — the strongest among the REIT sectors.
“It still feels like there’s going to be pricing power for landlords in the public market,” Laughlin said. “So we’re still pretty bullish on the future for those stocks, at least in ’26,” he said.
Residential mortgage REITs, meanwhile, had a banner year in 2025, after the Federal Reserve cut interest rates three times, with total returns surging 16 percent. But that momentum has cooled as the initial excitement over lower borrowing costs has waned. Total returns for the sector have climbed just over 4 percent year to date.