Principal’s Rich Hill on REITs’ Transition from Recovery to Expansion

Rich Hill, Global Head of Research and Strategy at Principal Asset Management, told the REIT Report podcast that the REIT market’s transition from recovery into expansion is an important signal that indicates the path forward for the broader commercial real estate market.REIT gains so far in 2026 indicate that “predictable earnings and income-driven total returns are becoming more attractive again. That's been out of favor for the past several years, but it seems to be a little bit more in vogue right now,” Hill said.Hill stressed that dispersion in returns is a continuing theme in the CRE market and “investors are going to have to recognize that this cycle is really about picking the right property types in the right markets…this is a cycle for selectivity, this is not a cycle where you can play broad-based mega themes.”Hill said the current cycle should also be viewed through a longer-term lens. Market expansions, he explained, usually last around 12 years. “Why do they last so long? It's just not about price returns, it's also about underappreciated income returns. We think this is actually a really interesting cycle. If you think you've missed the bottom, you haven't. This is going to play out for a long period of time.”