The iShares US Real Estate ETF (IYR) popped 2% when the Federal Reserve left interest rates unchanged last week. Fred Schmidt, president and COO of Coldwell Banker Commercial Affiliates, said the relief rally was to be expected considering the interest rate sensitivity of the REIT index and he remains bullish on the sector. ‘I think the interest rates are somewhat baked into the numbers and so for a long term investor no matter where you get in it’s a good play overall,’ said Schmidt, adding that rents are going up due to the improving economy. Digging deeper into the commercial real estate space, Schmidt said high and low end retailers have been performing well, yet the mid-level players have been challenged. Schmidt also said same-day online delivery and mobile wallets have become a cornerstone in the modern shopping experience and commercial real estate is quickly adapting to meet the warehousing and retail needs expected from consumers. A Coldwell Banker survey found that 50% of U.S. adults are more likely to make a purchase online if there is a same-day delivery option, and 40% expect this option to be available when shopping online. Furthermore, the survey revealed that the option of same day delivery is more likely to drive the purchasing decisions of Millennials and parents with children under 18 living in their household than other generations and segments of the population. The trend towards same-day delivery is already shifting suppliers’ inventory needs, according to Schmidt.
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