Apartment and retail had similar quarterly total returns, while retail outperformed apartment and the overall NPI for the year. Office experienced marginally positive appreciation in the second half of '16 for a 6.20% annual total return. Hotels had quarterly depreciation throughout '16 to remain the weakest property type with total returns of 0.67% in Q4 and 4.71% for the year.

Across the board, occupancy remains at its 15-year high of 93.2%, while varying widely by property type. Occupancy was up for industrial and office over the quarter and the year, but down for apartment and retail. With an increase of 90 basis points over the year, to 96.1%, industrial occupancy remains the highest of all property types, while office, at 88.8%, remains the lowest despite experiencing the same annual increase in occupancy as industrial.

Industrial took first place for annual NOI growth, at 7.4%, followed closely by apartment at 7.0%. Office NOI growth closely tracked the overall NPI at 5.0%, and retail had 2.6% NOI growth in '16.

CHICAGO—The moderating trend seen in property returns as the cycle has matured over the past two years continued in the fourth quarter, the National Council of Real Estate Investment Fiduciaries said Wednesday. The Q4 2016 NCREIF Property Index, reflecting investment performance for 7,364 commercial properties valued at a combined $525.3 billion, reflected a total return of 1.73%, down from 1.77% in Q3 and 2.91% a year ago.

NCREIF says the income return has trended lower through most of the current cycle, with property values rising faster than income as the recovery began, followed by slower quarterly income gains as fundamentals stabilized. Appreciation experienced a steeper downward trend last year, with three consecutive quarters of sub-1% appreciation and a Q4 capital return at one-third of the rate returned in the same quarter a year ago.

The annual NPI total return for '16 was 7.97% and consisted of a 4.74% income return and 3.10% appreciation. That's lower than the annualized average total return of 10.92% for the past five years, but above the 10-year average of 6.93%.

With quarterly and annual total returns of 3.04% and 12.31%, respectively, industrial maintained its lead over all other property types. It was also the only sector to outpace the overall NPI for the quarter and had the only double-digit annual total return over the past year.

Apartment and retail had similar quarterly total returns, while retail outperformed apartment and the overall NPI for the year. Office experienced marginally positive appreciation in the second half of '16 for a 6.20% annual total return. Hotels had quarterly depreciation throughout '16 to remain the weakest property type with total returns of 0.67% in Q4 and 4.71% for the year.

Across the board, occupancy remains at its 15-year high of 93.2%, while varying widely by property type. Occupancy was up for industrial and office over the quarter and the year, but down for apartment and retail. With an increase of 90 basis points over the year, to 96.1%, industrial occupancy remains the highest of all property types, while office, at 88.8%, remains the lowest despite experiencing the same annual increase in occupancy as industrial.

Industrial took first place for annual NOI growth, at 7.4%, followed closely by apartment at 7.0%. Office NOI growth closely tracked the overall NPI at 5.0%, and retail had 2.6% NOI growth in '16.