Subject: Re: REITs, 1970s/80s, stagflation
I was barely out of college in the 1970’s, had a near minimum wage job that allowed me luxuries like a McDonald’s dinner once in a while, and wildly overpriced regular gas in my Toyota. That’s my way of saying “investing?” I had no idea at the time. Flash forward…

I have read that the two things that held up during the decade of OPEC and interest rates were real estate and gold.

Gold is a particularly special case, since it was price controlled by government fiat until Nixon allowed it to float, so any price movements following that should probably be looked at with a careful eye, as the “history” is really no history at all. I would guess it took the better part of a decade to really reflect a market price that was fair.

And frankly until I started reading our departed Ralph on the Fool’s REIT board, I barely knew they existed. While I have owned a couple over the past decades they have never been an important part of our portfolio, so I claim no special insight here, either.

All of that cautionary language said, I agree with some and disagree with some of your quick study. To wit: high end offices? Yeah, could be trouble. High end stores? In this K shaped economy that’s the only segment doing well. The Journal had a piece a day or two ago about how Class A malls were thriving, while Class B were suffering and Class C are near death.

The rich ARE getting richer, and that translates down into where they shop and what they buy. If you’re a mid-market retailer you have your work cut out for you. Ironically, if you’re a down-market retailer you might be OK; Dollar Stores (and their cousins) seem to do well when consumers are pressed (not that that segment is going to go to any mall, of course.) What does that mean for prestige office towers? I have no idea. Will AI hollow them out? Will even richer corporations want to flaunt it? No clue.

For residential and commercial “location is key” but perhaps not in the old way. Besides being stratified by income, we are also seeing geographic separation: some parts of California are “to the moon, Alice” while others are languishing. Likewise Colorado, likewise Texas. I wouldn’t want to have any retail in the Rust Belt these days, would you? Would anybody? (I know national franchises have to be *everywhere*, but those in a middle tier do not and can pick their markets more carefully, or at least I would if given that task.

There’s a lot in flux right now, so I have no idea if specific sector REITs will prosper, (industrial, retail, data centers, health care) or whether those that mix and blend to iron out the volatility would be a better bet.

As I say, it’s not something I follow except in a general way, and I would be interested to hear what others have to say, if anything.