Healthcare and Data Center REITs Dominate Real Estate Rankings
1h ago|4 min read2Standard
Fazen Markets Editorial Desk
Collective editorial team · methodology
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Healthcare and data center real estate investment trusts (REITs) ranked as the top-performing real estate sectors based on growth metrics published on June 25, 2026. The analysis, sourced from Seeking Alpha, highlights a stark divergence within the commercial property market. The outperformance underscores a market rotation into asset classes with resilient, non-cyclical cash flows. The shift in investor preference is occurring amid persistent challenges for office and retail properties.
The current dominance of healthcare and technology-linked real estate marks a significant departure from the pre-2020 market structure. Historically, premium mall and Class-A office REITs often led performance rankings. The last major rotation into defensive real estate occurred during the 2022-2023 rate hike cycle, when industrial and warehouse REITs outperformed as e-commerce demand surged. The current trend extends this defensive pivot further into sectors with even stronger secular tailwinds.
The macro backdrop features a Federal Funds rate holding steady at a restrictive level, with the 10-year Treasury yield hovering around 4.3%. This high-cost-of-capital environment continues to pressure valuations for assets dependent on speculative future growth or significant lease rollovers. The catalyst for the current ranking is the accelerated adoption of artificial intelligence and an aging demographic wave. These forces are creating concrete, near-term demand for data storage capacity and healthcare facilities, insulating these REITs from broader economic cycles.
The growth rankings are derived from a composite score evaluating funds from operations (FFO) growth, occupancy rates, and same-store net operating income (NOI) increases. Data center REITs reported an average year-over-year FFO growth of 12.5% in the first quarter. Healthcare REITs, specializing in medical offices and senior housing, followed closely with an average FFO growth of 9.8%. In stark contrast, the office REIT sector averaged a decline in FFO of 3.1% over the same period.
| Sector | Avg. FFO Growth (YoY) | Avg. Occupancy Rate |
|---|---|---|
| Data Center REITs | +12.5% | 94.5% |
| Healthcare REITs | +9.8% | 92.8% |
| Office REITs | -3.1% | 81.2% |
This performance gap is also evident in total returns. The Dow Jones Equity All REIT Index is up 4.2% year-to-date, while a focused index of data center REITs has gained over 18%. The Vanguard Real Estate ETF (VNQ), a broad market proxy, has underperformed the S&P 500 by approximately 600 basis points this year.
The performance divergence signals a fundamental repricing of risk within commercial real estate. Capital is flowing toward sectors with high visibility on future cash flows. Major data center operators like Equinix (EQIX) and Digital Realty (DLR) are direct beneficiaries, seeing increased institutional investment to fund expansion for AI workloads. Healthcare REITs such as Ventas (VTR) and Welltower (WELL) are gaining favor due to long-term, triple-net leases that provide inflation-protected income.
A key risk to the data center thesis is the immense capital expenditure required to build and power new facilities, which could pressure balance sheets if financing costs rise further. For healthcare REITs, a counter-argument centers on potential regulatory changes to government healthcare reimbursement rates. Hedge funds and pension funds are reportedly increasing long positions in top-tier data center and healthcare REITs while maintaining short exposure to office-heavy REIT ETFs. This paired trade reflects the conviction that the sector divergence will persist.
Market participants should monitor the next round of quarterly earnings reports, starting mid-July, for updated guidance on development pipelines and leasing spreads. Specific catalysts include Equinix's earnings call on July 30 and Welltower's report on August 5. Any commentary on power availability and costs for data centers will be scrutinized for impacts on profitability.
Key technical levels to watch include the 50-day moving average for the Global X Data Center REITs & Digital Infrastructure ETF (SRVR) at approximately $85, which has acted as support. For healthcare REITs, a break above the $105 resistance level for the iShares U.S. Healthcare ETF (IYH) would confirm bullish momentum. The next Federal Open Market Committee meeting on September 17-18 will be critical; a signal of impending rate cuts could narrow the performance gap by providing relief to more indebted sectors.
While this is not investment advice, the largest and most analyzed healthcare REITs by market capitalization include Welltower (WELL), Ventas (VTR), and Healthpeak Properties (PEAK). These companies own diversified portfolios of senior housing, medical office buildings, and life science facilities. Investment decisions should be based on individual analysis of their occupancy rates, lease structures, and exposure to government reimbursement programs like Medicare.
The artificial intelligence boom requires immense computational power, which is housed in specialized data centers. AI workloads demand significantly more energy and cooling infrastructure than traditional cloud computing. Data center REITs lease this critical physical infrastructure to technology companies under long-term contracts, generating stable, predictable revenue streams that are directly tied to the growth of data consumption and AI model training.
Valuation metrics for data center REITs have expanded, with many trading at a premium to their historical average price-to-FFO ratios. However, proponents argue this premium is justified by their superior growth profile and the defensive nature of their cash flows. The key question for investors is whether the projected growth in AI-related demand can continue to outpace the rate of new data center construction, thereby supporting high occupancy and rental rates.
Structural demand for AI infrastructure and healthcare services has created a clear winner-take-most environment within real estate.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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