With no help from the Federal Reserve, the notoriously rate-sensitive real estate sector is delivering some impressive performances this year, as the largest ETF in the category is up 10%.

Proving the advantages of active management, the ALPS Active REIT ETF (REIT) is higher by nearly 16%. Obviously, that’s an impressive showing against an uncooperative interest rate backdrop, indicating that the ETF’s 2026 sturdiness is also testament to some sound fundamentals across the real estate sector, particularly among apartment, industrial, office and retail REITs.

In a recent report, Nareit pointed out that the “property market appears to be at an inflection point,” noting the four aforementioned REIT segments need to remain vigilant on the supply/demand front. It appears those companies are accomplishing that objective, and that’s to the benefit of REIT investors because the ETF allocates more than 30% of its weight to industrial, retail and office REITs.

Bright Spots for REIT

The ALPS ETF’s status as an actively managed fund is pertinent today because management of supply/demand dynamics isn’t uniform across the real estate sector. Fortunately, the broader trends may bode well for REIT.

“Each sector has maintained an upward trajectory in its excess net demand measure, signaling continued improvement in its supply and demand fundamentals,” observed Nareit. “After 26 consecutive quarters of negative excess net demand, the office sector breached into positive territory at the start of this year and gained further momentum in the second quarter of 2026. Notably, office was the only traditional property type where demand exceeded supply. For the other sectors, net absorption remained below net deliveries, though apartments and retail were effectively at equilibrium and industrial continued to move closer to balance.”

Retail REITs, the third-largest industry exposure in the ALPS ETF, are proving to be a source of strength. Even amid perceived threats from online shopping, occupancy rates for retail REITs remain high, auguring well for the longer-ranging trajectory of the REIT ETF.

“Retail occupancy has remained high and stable for the past few years; it was 95.6% in the second quarter of 2026. Industrial, apartment, and office occupancy rates have been trending downward, but have shown recent signs of stabilization. As of the second quarter of 2026, occupancy rates for industrial, apartments, and office stood at 92.5%, 91.9%, and 86.1%,” added Nareit.

The next hurdle for industrial, office and retail REITs to clear is improving rent growth rates, which have been lethargic. If that objective is accomplished, the ETF could generate more upside.

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