Optimism is back for commercial real estate. Property performance through the third quarter of 2021 reflects considerable gains for real estate investors, while interest rates and inflation are of limited concern to the asset class.

Investment returns for institutional-quality properties hit a 15-year high in the third quarter of 2021, according to the National Council for Real Estate Investment Fiduciaries (NCREIF). NCREIF tracks institutional-quality commercial property and fund performance, using data provided by its investment-management members.

The NCREIF Property Index (NPI) total return for Q3 2021 was 5.2%, comprising a 1% income return and a 4.2% capital return (or appreciation). The last time the NPI quarterly total return was over 5% was Q4 2005. For context, the 20-year average quarterly total return is 2%.

Q3 2021 commercial property performance was stunning. But it is also impressive given the very short and shallow depreciation cycle in 2020. Depreciation, as measured by the capital return, lasted only two quarters (Q1 and Q2 2020) and resulted in cumulative depreciation of only 2.7%. As a result, commercial property values in the NPI are already 5% above their pre-pandemic peak. Click to read more at www.nasdaq.com.