Best Commercial Real Estate ETFs

Read our Advertiser Disclosure.
Contributor, Benzinga
November 3, 2023

Invest in the best commercial real estate ETFs easily with Interactive Brokers.

Commercial real estate is a thriving market for investors looking to diversify their portfolios. Investing in single-family homes and residential condominiums can earn you good returns for your money. However, commercial real estate offers a much higher yield on your investment. You can consider investing in the best commercial real estate ETFs to amplify your returns in the long run. 

You can buy and sell shares of ETFs like any other stock listed on the stock exchange. Unlike regular stocks, ETFs have holdings in several underlying assets such as companies and commodities. Commercial real estate ETFs tend to have holdings in companies that purchase and rent properties solely for business. 

These property types can include office spaces, shopping centers, hotels, restaurants, warehouses, storage facilities, hospitals and industrial complexes. Companies that invest in such properties are called real estate investment trusts (REITs).    

Today’s Commercial Real Estate Movers

Take a look at the commercial real estate ETFs with the biggest price movements on the market. 

Stock Movers

Gainers

Loser

Session: Feb 21, 2024 4:00PM EST - Feb 22, 2024 3:59PM EST

Commercial Real Estate ETFs by AUM

Take a look at the top commercial real estate ETFs available on the stock exchange. 

Invesco S&P 500® Equal Weight Real Estate ETF (NYSEARCA: EWRE)

Invesco S&P 500® Equal Weight Real Estate ETF has been on the market since 2015. It tracks the S&P 500 Equal Weight Real Estate Index and has holdings in 31 companies. These companies include Weyerhaeuser Company (WY), Kimco Realty Company (KIM), Digital Realty Trust, Inc. (DLR) and SL Green Realty Corporation (SLG).

This ETF has an expense ratio of 0.40% and has assets under management (AUM) of $20.7 million. It has a 52-week low of $18.29 and a 52-week high of $32.03. Invesco S&P 500® Equal Weight Real Estate ETF trades more than 17,868 shares per day. It has an annual dividend yield of $1.11 per share. This ETF has a 3-year return rate of 14.86% and a 5-year return rate of 26.49%. 

img_6001dd51ec31a

Historical performance of Invesco S&P 500® Equal Weight Real Estate ETF over the last 5 years

iShares Cohen & Steers REIT ETF (BATS: ICF)

iShares Cohen & Steers REIT ETF has been open to trade since 2001. It tracks the Cohen & Steers Realty Majors Index and has holdings in 32 companies. These companies include Prologis, Inc. (PLD), American Tower Corporation (AMT), Equinix, Inc. (EQIX) and Digital Realty Trust, Inc. (DLR). 

img_6001dd556ecd4

Cumulative growth of $10,000 investment in iShares Cohen & Steers REIT ETF

This ETF has an expense ratio of 0.34% and has AUM of $1,888 million. It has a 52-week low of $35.93 and a 52-week high of $61.65. iShares Cohen & Steers REIT ETF trades more than 60,293 shares per day. It has an annual dividend yield of $1.89 per share. This ETF has a 3-year return rate of 13.33% and a 5-year return rate of 21.18%. 

img_6001dd583912a

Historical performance of iShares Cohen & Steers REIT ETF over the last 5 years.

iShares Core U.S. REIT ETF (NYSEARCA: USRT)

iShares Core U.S. REIT ETF has been listed on the stock exchange since 2007. It tracks the FTSE NAREIT Equity REITs Index has holdings in 154 companies. These companies include Public Storage (PSA), Welltower, Inc. (WELL), AvalonBay Communities, Inc. (AVB) and Alexandria Real Estate Equities, Inc. (ARE). 

img_6001dd5ae41a8

Cumulative growth of $10,000 investment in iShares Core U.S. REIT ETF

This ETF has an expense ratio of 0.08% and has AUM of $1,564 million. It has a 52-week low of $30.26 and a 52-week high of $56.17. iShares Core U.S. REIT ETF has high liquidity and trades more than 101,838 shares per day. It has an annual dividend yield of $1.51 per share. This ETF has a 3-year return rate of 9.19% and a 5-year return rate of 20.95%. 

img_6001dd5da51f9

Historical performance of iShares Core U.S. REIT ETF over the last 5 years

First Trust S&P REIT Index Fund (NYSEARCA: FRI)

First Trust S&P REIT Index Fund has been on the market since 2007. It tracks the S&P United States REIT Index and has holdings in 152 companies. These companies include Welltower, Inc. (WELL), Ventas, Inc. (VTR) and Sun Communities, Inc. (SUI). 

This ETF has an expense ratio of 0.50% and has AUM of $71.8 million. It has a 52-week low of $14.66 and a 52-week high of $26.92. First Trust S&P REIT Index Fund trades more than 8,939 shares per day. It has an annual dividend yield of $0.72 per share. This ETF has a 3-year return rate of 7.64% and a 5-year return rate of 17.49%. 

img_6001dd60239cb

Historical performance of First Trust S&P REIT Index Fund over the last 5 years

iShares U.S. Real Estate ETF (NYSEARCA: IYR)

iShares U.S. Real Estate ETF has been open to trade since 2000. It tracks the Dow Jones U.S. Real Estate Index and has holdings in 85 companies. These companies include Crown Castle International Corporation (CCI), American Tower Corporation (AMT), Welltower, Inc. (WELL) and Public Storage (PSA).

img_6001dd62530c8

Cumulative growth of $10,000 investment in iShares U.S. Real Estate ETF

This ETF has an expense ratio of 0.42% and has AUM of $4,432 million. It has a 52-week low of $54.64 and a 52-week high of $97.83. iShares U.S. Real Estate ETF has high liquidity and trades more than 2.9 million shares per day. It has an annual dividend yield of $2.21 per share. This ETF has a 3-year return rate of 14.64% and a 5-year return rate of 30.82%.

img_6001dd648957d

Historical performance of iShares U.S. Real Estate ETF over the last 5 years

Benefits of Investing in Commercial Real Estate ETFs

Here’s a rundown of the advantages of investing in commercial real estate ETFs. 

Commercial Real Estate ETFs are Affordable

You can own shares in physical assets at affordable prices by investing in commercial real estate ETFs. Financing a real estate purchase can take months or even years. You might be required to pay at least a 20%-30% down payment to purchase a property.

People with smaller capital can easily invest in commercial real estate through ETFs. Generally, ETFs will charge you an expense ratio of less than 1% to cover managerial costs. For example, the expense ratio of the Real Estate Select Sector SPDR Fund (XLRE) is 0.13%. It means you’ll have to pay $1.3 per year for every $1,000 you invest.    

Commercial Real Estate ETFs Yield High Returns

Real estate is among the largest markets around the world. REITs that invest in commercial real estate earn higher revenue through rent compared to residential properties. 

REITs are obligated to distribute at least 90% of their income to their investors. By investing in commercial real estate ETFs, you can earn regular payments through dividends. These dividends are distributed to shareholders every month, quarter or year. 

Commercial Real Estate ETFs Could Protect You Against Inflation

The price of stocks from industrial sectors such as information technology, automobile, oil and gas are prone to inflation during market swings. Commercial real estate ETFs are more stable during market crashes and serve as an effective hedge against rising inflation rates.  

Commercial Real Estate ETFs Have Higher Liquidity

You can buy and sell shares of commercial real estate ETFs at any time. You don’t have to deal with cumbersome tasks such as relieving your tenant or finding a buyer to sell your commercial property.

Millions of ETF shares are traded in high volume every day on the stock exchange. If you are in need of emergency funds, you can liquidate your investments in minutes. 

Commercial Real Estate ETFs Provide Instant Diversification

Real estate companies can pool money from many trusted investors and purchase more properties regularly. By investing in real estate ETFs, you can own shares in multiple income-generating properties with a single trade. 

Unlike directly investing in commercial real estate, ETFs allow you to diversify your portfolio at a lower cost. Commercial real estate ETFs let you own small chunks of multiple income-generating properties in prime locations at a margin of the cost.  

Best Online Brokers for Commercial Real Estate ETFs

You have to sign up for an account with an online broker to start trading. An online broker lets you buy and sell shares on major stock exchanges such as the Nasdaq and the NYSE. You can browse through thousands of stocks and pick the ones right for you. 

Most online brokers let you trade stocks and ETFs commission-free. You’ll also find a ton of educational resources on their websites to help improve your trading strategies. 

Benzinga has handpicked these top online brokers to get you started. 

Diversify your Portfolio with Commercial Real Estate ETFs

Commercial real estate properties are large spaces and will cost more than residential properties. It will also cost you a hefty amount of money to furnish it and provide the right infrastructure. Alternatively, the low cost of ETFs makes commercial real estate investing a viable option for new investors. It can also diversify your portfolio with a wide range of commercial properties across the U.S. and the world. 

Frequently Asked Questions

Q

What are commerical real estate REITs?

A

Commercial real estate REITs are trusts that include commerical real estate properties.

Q

Are commercial real estate REITs good investments?

A

Commercial real estate REITs can be a good investment if you plan to hold long term and do plenty of research before investing.

Q

What are the best commercial real estate REITs?

A

Check out Benzinga’s list of the best commercial real estate REITS above.