REIT ETFs Stage Quiet Comeback as Data Centers Surge

REIT exchange-traded funds posted gains in 2026, led by a 37% year-to-date rise in data center REITs through May. Schwab’s U.S. REIT ETF (SCHH) surpassed $10 billion in assets under management and the ALPS REIT Dividend Dogs ETF (RDOG) returned roughly 15% so far this year.

Policy shifts this year contributed to the price gains. After a high-rate period in 2024–2025, central banks flattened policy trajectories and in some cases reduced rates. Lower borrowing costs eased pressure on commercial property valuations and coincided with stronger demand for physical data and AI infrastructure.

Performance varied by property type. Data center REITs led returns through May 2026. Industrial and logistics REITs benefited from ongoing e-commerce activity, reshoring and supply-chain upgrades. Health care REITs, including senior housing and skilled nursing operators, showed resilience tied to population aging. Office REITs remained under pressure from persistent hybrid work patterns, and some multifamily markets faced local oversupply and lower valuations.

Fund-level results reflected those sector differences. The State Street Real Estate Select Sector fund returned about 9% year-to-date and held large positions in cell-tower and industrial landlords. SCHH moved past $10 billion after taking in more than $1 billion of net inflows over the past year and carries a 0.07% expense ratio; its holdings in technology- and health care-linked landlords reduced its exposure to office-sector weakness. RDOG, an equal-weight, high-yield strategy across REITs, posted roughly a 15% total return in 2026 and showed a trailing 12-month dividend yield above 6%, helped by positions in discounted segments such as hospitality and gaming. Focused thematic funds that back logistics and tech-linked real assets reported gains near 20% on a net-asset-value basis.

REITs are required by law to distribute at least 90% of taxable income to shareholders as dividends. That requirement gives REIT ETFs relatively high yields and an income profile similar to fixed income while preserving potential for capital appreciation and dividend growth that can track inflation. Financial advisers have increased use of REIT ETFs inside equity allocations to raise portfolio dividend income without fully ceding equity upside.

Fund flows in 2026 showed increased investor demand for large, low-cost index REIT funds alongside more tactical, yield-focused strategies. Market participants note the recovery has been uneven, with opportunities and risks concentrated in specific sectors and names.