NEW YORK (TheStreet) -- Publicly traded real estate investment trusts have been flat this year, but don't let that fool you: "Commercial real estate is extremely strong right now," says Mitchell Sabshon, CEO of Inland Real Estate Investment Corporation. In fact, he points out, its dramatic price increases have in many cases been outpacing the broader economy.

In short, "It's a great time to be buying commercial real estate," said Sabshon.

In the current moderate-growth environment, Inland's focus is on properties that offer it more flexibility to boost rents. "We want to own real estate that has a preponderance of shorter term leases," he says. "The last thing we want to own right now is real estate that has 20-year leases with little or no ability to increase rents, and therefore if the Fed ultimately increases interest rates, fall behind that increase."

Apartment buildings and multi-tenant, grocery-anchored retail strips, for example, he says, have those shorter-term leases, and if the REIT manages the property correctly, tenants will "begrudgingly go along" with rent hikes.

For Inland, the biggest hot spots aren't the nation's premiere cities. "We shy away from the top 10 or so MSAs," he says. "We like strong secondary or tertiary markets. We want to be the best shopping center, apartment building, self-storage facility, at 'Main and Main,' in that secondary or tertiary market."

With the Federal Reserve edging toward raising rates, one question for REIT investors must be how higher rates will impact their investments. Shorter-term leases, he explains, allow REITs to boost rents as interest rates rise. Longer-term leases cause a REIT to behave more like a bond, which will underperform falls as rates increase.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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