June 15, 2006
For years, REIT executives have insisted that Washington, D.C., New York, Northern and Southern California and other big markets promise more job and population growth than most cities in the nation's heartland. Big coastal markets also offer REITs security: A scarcity of land and high property costs severely restrict new development, and thus competition. Southern California apartment rents could spike 7% this year after prior hikes of 3%, says Delores Conway, director of the University of Southern California's Casden Real Estate Economic Forecast. "It makes sense that REITs have been positioning themselves away from the Midwest," she said.