VanEck Launches ETF Focused on Office and Commercial REITs

VanEck has launched the VanEck Office and Commercial REIT ETF (DESK), which is intended to provide concentrated exposure to the US office property segment – an industry that has struggled since the pandemic.

The fund seeks to replicate the price and yield performance of the MarketVector Office and Commercial REITs Index.

DESK maintains an index of 25 real estate investment trusts, predominantly office REITs but also a few retail and industrial REITs. According to VanEck, DESK is the only ETF focused on investing in US office REITs.

“Commercial real estate is undoubtedly continuing to face strong headwinds and negative sentiment. However, if one were to consider the relatively strong economy and retail real estate segment, investors may find this is an opportunity for tactical exposure or potential long-term capital appreciation,” said Coulter Regal, Product Manager for VanEck.

Real estate shares have been performing poorly this year as the Fed’s aggressive rate hikes raise the cost of financing properties, reducing demand.

Perhaps none was more influenced by the pandemic and the accompanying work-from-home trend than commercial real estate. According to the National Association of Realtors, office property valuations in the United States remain considerably low, and vacancy rates, which stood at 9.4% in Q2 2019, were 13.1% in Q2 2023.

But this market upheaval may present an opportunity for office REIT investors.

DESK carries an expense ratio of 0.50%. The average for REIT ETFs is 0.42%.