REITs Stand Still as Layoffs Surge: Is Real Estate the Last Safe Harbor or a Value Trap?

The market loves a good hiding place, especially when the rest of the house is on fire. As tech stocks get steamrolled and crypto looks like a liquidity sinkhole, real estate investment trusts (REITs) have been suspiciously calm. The Vanguard Real Estate ETF is sitting at $91.12, unchanged, as if January’s 17-year high in layoffs never happened. Wall Street’s most accurate analysts, according to Benzinga, are suddenly bullish on real estate stocks with over 5% dividend yields. The logic is simple: when markets are turbulent, investors want yield and stability. The question is whether REITs are actually a safe harbor or just the last deck chair on the Titanic.

Let’s start with the facts. January saw US employers announce 108,435 layoffs, up 118% from the same period last year and 205% from December 2025, according to Challenger and CNBC. That’s the worst January for job cuts since 2009. The tech sector is in open retreat, with hedge funds getting crushed by the AI sell-off, and software stocks only just stabilizing after a bruising rout. Yet the real estate sector, at least on the surface, is holding steady. The VNQ ETF hasn’t budged, and the dividend crowd is still showing up for yield. Wall Street’s value-stock pros are touting REITs as a better bet than Big Tech, and the “Great Rotation” narrative is everywhere. But does the data back it up?

Context matters. The last time layoffs spiked this hard, real estate was not exactly a safe haven. In 2009, commercial property values cratered, and REITs took years to recover. The difference now is the yield environment. With central banks still dragging their feet on rate cuts, and inflation data looming, yield is scarce. REITs offer 5% or more, which looks attractive compared to cash or government bonds. But the macro backdrop is not friendly. Rising layoffs mean weaker demand for office and retail space, and the remote work trend is not going away. The risk is that today’s calm is just the eye of the storm.

The narrative that REITs are immune to economic shocks is, frankly, nonsense. The sector has benefited from a decade of cheap money and relentless yield-chasing, but the fundamentals are getting shaky. Office vacancies are still elevated, retail is a minefield, and even residential REITs are facing affordability issues as wage growth stalls and layoffs mount. The only thing keeping the sector afloat is the promise of steady dividends. But dividends are only as safe as the underlying cash flows, and those are looking increasingly fragile. If the layoff trend continues, expect cracks to appear in the payout ratios.

The technicals are a study in inertia. VNQ is flat at $91.12, with no sign of panic but also no sign of life. The ETF has been range-bound for months, oscillating between $88 and $94. The RSI is neutral, and moving averages are converging. This is classic late-cycle behavior: the market is waiting for a catalyst. If inflation data surprises to the upside, or if layoffs accelerate, the next move could be sharp. On the flip side, if the Fed blinks and signals rate cuts, REITs could catch a bid. But right now, the sector is stuck in limbo, with investors hoping that yield will save them from the macro storm.

Strykr Watch

Keep an eye on VNQ’s $88 support level. A break below that opens the door to a retest of the $82-84 zone, which held during last year’s mini-panic. Resistance is at $94, and any sustained move above that would signal renewed risk appetite. Watch dividend payout ratios closely, especially for office and retail REITs. If layoffs start to hit occupancy rates, expect guidance cuts and dividend warnings. Monitor the spread between REIT yields and 10-year Treasuries, if that compresses, the sector loses its appeal fast. Technical indicators are neutral, but volatility could spike if macro data disappoints.

The risks are obvious. If layoffs continue to surge, commercial real estate demand will weaken, and vacancy rates will rise. That puts pressure on cash flows and dividends. Any hint of a credit crunch or refinancing stress could trigger a sharp selloff, especially for leveraged REITs. The sector is also vulnerable to regulatory changes, especially around property taxes and rent controls. And if the Fed stays hawkish, higher rates will erode the relative appeal of REIT yields. The calm could break quickly if any of these risks materialize.

Opportunities exist for traders willing to play the range. Buying VNQ near $88 with a stop below $86 offers a defined-risk setup, targeting a bounce to $94 if the sector catches a bid. Dividend-focused investors can look for REITs with low payout ratios and diversified portfolios. Some are rotating into industrial and logistics REITs, which are less sensitive to layoffs and more tied to e-commerce growth. Shorting office or retail REITs with high leverage is another way to play the bear case. The key is to avoid the crowded trades and focus on relative value.

Strykr Take

REITs are not the safe harbor the market wants them to be. The sector’s calm is deceptive, masking growing risks beneath the surface. Strykr Pulse 52/100. Threat Level 3/5. If you’re buying yield, keep your stops tight and your eyes on the macro data. This is not the time to get complacent.