1. American Tower
Telecommunications infrastructure REIT American Tower has been the largest REIT in the stock market for several years now and widened its lead after a 45% gain in 2019.
As its name implies, American Tower owns and operates a massive network of communications towers, such as those that cellular networks rely on for data transmission. The general business model is that American Tower leases land, builds a communications tower, and leases space at the top of the tower to one or more tenants. American Tower owns more than 171,000 communications sites, with about 41,000 in the U.S. and the rest located all over the world.
2. Crown Castle International
With the surge in connected devices around the world in recent years, it shouldn't be too much of a shock that the two largest REITs both operate communications property. Like American Tower, Crown Castle owns a network of communications towers. They also own other forms of wireless infrastructure, such as wireless equipment installed on rooftops. Crown Castle's portfolio consists of over 40,000 communications towers, 70,000 small cell nodes, and over 75,000 miles of fiber optic cable. And unlike American Tower, Crown Castle is mainly a U.S.-based operation.
An industrial REIT, Prologis owns and operates so-called logistics real estate. This includes distribution centers, warehouses, and other types of properties involved in getting things from point A to point B. Prologis has performed extremely well in recent years, capitalizing on the growing need for distribution space that comes with the e-commerce revolution. Prologis owns nearly 3,800 buildings with a staggering 797 million square feet of space, located in 19 countries around the world.
Data center REIT Equinix has been one of the best-performing stocks in the real estate sector in recent years, with a 66% gain in 2019 alone. Simply put, demand for secure and reliable places to store and transmit data has surged in demand along with the rise of the cloud computing industry and the ever-increasing number of connected devices. Equinix owns or operates more than 200 data centers worldwide, and it could still have lots of room to grow, as the industries it serves are still in their early innings of expansion.
5. Simon Property Group
Just a few years ago, Simon Property Group was the largest REIT in the market, but thanks to the surges in communication infrastructure, e-commerce, and the need for data storage, it has since been dethroned. Simon owns a massive portfolio of some of the most valuable and successful shopping malls in the U.S. under "The Mills" brand name and also has a leading market share in outlet centers with its Premium Outlets. Retail real estate has been a weak part of the real estate sector for several years, but Simon has managed to outperform most other mall operators by adopting a mixed-use property strategy, incorporating things like entertainment venues, trendy dining options, and hotels into its properties.
6. Public Storage
Public Storage has a dominant market lead in the self-storage business, with nearly 2,500 storage facilities in the United States serving more than 1 million customers. In addition, Public Storage owns a portfolio of business parks and has an interest in a large network of European storage facilities.
The largest healthcare REIT in the market, Welltower has a massive portfolio of mostly senior-focused properties. With large holdings in senior housing, long-term care facilities, and outpatient medical properties, Welltower is a play on the aging U.S. population and the rising healthcare needs that are expected to come over the next few decades.
8. Equity Residential
The largest apartment REIT in the market (but not by a wide margin -- see number 9), Equity Residential owns 308 apartment properties in high-value markets like New York City, San Francisco, and Washington, D.C. These are markets that have large renter populations, strong job growth, and high barriers to entry when it comes to homeownership.
9. AvalonBay Communities
AvalonBay is not only nearly identical to Equity Residential in terms of size but by business model as well. Like Equity, AvalonBay owns a portfolio of apartment communities in high-value markets (most of the same ones). One key differentiator is that AvalonBay is more of a developer, building properties from the ground up in significantly higher volume than Equity.
10. SBA Communications
The "smallest" of the three communications REITs in the top 10, SBA Communications owns wireless infrastructure throughout the Americas. The company owns thousands of communications towers, manages thousands more on a third-party basis, and helps wireless service providers build out their own networks by developing and building new sites.
Which will be the biggest winners of 2020?
It should come as no surprise that some of the types of commercial real estate represented on this list were the biggest winners of 2019. Communications REITs had an excellent year thanks to the expected growth catalyst of the upcoming 5G rollout as well as the defensive nature of its business (people still use their phones during recessions). Industrial REITs performed well as e-commerce gained share in the retail industry, as online retail needs three times the distribution space of traditional retail. And the data center business is extremely healthy in the cloud-dominated world and should get even more growth tailwinds as 5G technology is introduced.
While these 2019 winners certainly have quite a bit of momentum as we head into 2020, there's no way to know how this list will look at the end of the year. So, we'll have to wait and see what the top-performing property types will be as the year progresses.