Defensive REITs Report Strong Earnings
Several REITs in defensive sectors reported strong 2025 results. Kimco Realty (NYSE:KIM) achieved record leasing milestones in its grocery-anchored centers, while Canadian-based SmartCentres posted high occupancy and robust same-property net operating income growth.
- The Chicago multifamily market remains one of the strongest in the U.S. as of mid-2025, with a low vacancy rate of 4.7% and annual rent growth reaching 3.4%, significantly outperforming the national average. Investment sales have been robust, reaching $4.6 billion in the trailing 12 months as of Q3 2025, with an average cap rate of 6.7%. - Limited new construction is a key driver of Chicago's multifamily market strength; new starts were down about 40% from 2024, and the 10,527 units under construction in Q3 2025 represent the lowest activity since 2012. This supply constraint is expected to lead to a 3% rent growth in 2026. - Adaptive reuse projects are becoming critical to bridging the supply gap in Chicago, with 806 units scheduled for delivery downtown in 2026 and another 3,921 proposed. Neighborhoods like Uptown and Lakeview also have significant adaptive reuse pipelines. - Midwest housing markets are anticipated to outperform other U.S. regions in 2026, driven by greater affordability. In January 2026, while home prices were falling in 106 U.S. housing markets, not a single one was in the Midwest. - For those looking to enter the real estate investment field, firms are increasingly seeking candidates with strong financial acumen, including financial modeling, cash flow analysis, and IRR calculations. A survey by Ferguson Partners indicated that 47% of real estate firms planned to increase staffing in 2025. - Building a personal real estate portfolio often involves creative financing and strategic tax planning. Investors can utilize methods like 1031 exchanges to defer capital gains taxes and cost segregation to accelerate depreciation deductions. - Aspiring investors can learn from local success stories, such as those chronicled by the "Straight Up Chicago Investor Podcast," which features individuals who have built portfolios from scratch in the Chicago area. Additionally, Andrew Holmes, CEO of the Chicago Real Estate Investor Association, shares his journey from a struggling agent to a successful investor, offering mentorship opportunities. - To stay informed, real estate professionals in the Midwest follow market reports and analysis from firms like CBRE, Cushman & Wakefield, and Matthews. Publications like *HousingWire* and *Scotsman Guide* also provide insights into regional performance.
