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 as homes or for non-professional purposes. The commercial sector consists of real estate used for business purposes; common types include retail and office space. Industrial real estate is comprised of properties used for manufacturing and production: factories, plants, etc.
The different segments have different metrics that investors and analysts use to gauge the health of the real estate industry. All three segments feature publicly traded real estate investment trusts, or REITs, portfolios of properties whose stock prices investors frequently use to determine and analyze industry trends.
REITs in the residential sector include Essex Property Trust Inc. (NYSE: ESS) and National Retail Properties Inc. (NYSE: NNN). Home prices also serve as a gauge for the health of this segment.
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.
(Read more about them in "The Risks Of Real Estate Sector Funds" and "What Factors Drive Share Prices in the Real Estate Sector?")