Investing in REITs: Real Estate Investment Trusts, 4th Edition

The 1980s: Overbuilding—The Troll Under the Bridge

The massive inflation of the 1970s had caused construction costs to skyrocket; these rising costs, together with only moderate rental rates, combined to discourage new property development. Thus, the new supply of property space was very modest, which favored property owners. Eventually, occupancy rates—and rents—rose. Property owners (including, of course, the REITs) were in pretty good shape.

TIP As the 1970s drew to a close, investors, reacting to high inflation, were searching for hard assets, such as gold, oil, and real estate.

Nevertheless, the extraordinarily high interest rates on mortgage ...