SOURCE: Wall Street Journal Online

A rally in real-estate investment trusts for the first quarter was brought on due to strong gains realized by two of the industries that benefit from the housing bust. These industries are apartments and self-storage. Eight of the top 10 performers last quarter by way of total returns -- a combination of stock-price appreciation and dividends -- were apartment or self-storage REITs.

The self-storage industry is doing well, right along with apartments, because people who can't afford the cost of their homes are moving. Mike Kirby, director of research for the investment-research firm Green Street Advisors, says "The simple logic there is that as people downsize their housing, they need some place to store their stuff."

Apartment REITs have a real advantage over the other REIT classes. They are able to borrow from Fannie Mae and Freddie Mac which helps to provide a stable source of capital to them. Because Fannie and Freddie are government-backed lenders they have a mandate to provide credit for affordable housing.

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SOURCE: Wall Street Journal Online

Demand for office space dropped for the first time since the economy emerged from its downturn earlier in the decade, according to first-quarter data from Reis Inc., a New York research firm.

Throughout the nation, the vacancy rate for office space has increased to 12.8% from 12.6% in the previous quarter. During the 2003 downturn after the technology bust, the rate hit 16.9% but it is felt that these levels won't be seen this time.

Even though some areas are hurting, some bright spots can be found. "The energy markets are booming," says Ric Clark, chief executive of office company Brookfield Properties. Houston topped the list of 79 markets that Reis surveys in terms of rent growth, up 3.5% last quarter. Denver, Tulsa and Oklahoma City also fared well.

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