What are the main segments of the real estate sector?
The main segments of the real estate sector are residential real estate, commercial real estate and industrial real estate. The residential sector focuses on the buying and selling of properties used for nonbusiness purposes. The commercial sector is concentrated on real estate used for business purposes; common types of commercial real estate include retail and office space. Industrial real estate focuses on manufacturing and production. Plants comprise the most common type of industrial real estate.
Different segments of the real estate industry have different metrics that investors and analysts use to gauge the health of the industry. All three segments feature publicly traded real estate investment trusts, or REITs, whose stock prices investors frequently use to determine and analyze industry trends. REITs in the residential sector include American Residential Properties Inc. (NYSE: ARCP) and National Retail Properties, Inc. (NYSE: NNN). Home prices also serve as a gauge for the health of the residential real estate sector.
In the commercial real estate sector, the largest REITs include Simon Property Group (NYSE: SPG) and Rouse Properties (NYSE: RSE). Investors in this sector also look at sales data for office buildings and retail developments and lease price trends for office and retail space.
ProLogis (NYSE: PLD), Rexford Industrial (NYSE: REXR) and PS Business Parks (NYSE: PSB) are some of the most well-known REITs in the industrial real estate segment. Apart from REIT stock prices, leading indicators for the industrial real estate sector include goods consumption, industrial production, port traffic and truck tonnage.