Real estate tends to be a cyclical sector. As the economy slows, demand for real estate typically cools off, weighing on property values and rental rates. Because of that, real estate investment trusts (REITs) focused on these property types could continue thriving even if the economy enters a downturn in this year.
When companies become big, like Prologis (NYSE: PLD), one of the largest real estate investment trusts (REITs) by market capitalization, there's a point at which many investors stop looking at their stocks as a growth opportunity. Growth, after all, can be challenging when you already have the majority of the market share. Shares of Prologis are down 21% year to date, largely for this reason: increasing concern over the company's ability to keep expanding in a changing economic environment.
Extra Space Storage's (EXR) high brand value, strategic acquisitions, solid third-party management platform and presence in key cities serve as growth drivers amid healthy industry fundamentals.