Real estate investment trusts underperformed the broad stock markets indices in September, and analysts at Keefe, Bruyette & Woods expect the macroeconomic fears caused by the sovereign debt crises in Europe to weigh down third-quarter results of many REITs. KBW said the overall economy "looms as a near-term concern for commercial real estate demand," although REITs have ample access to capital, while the lodging and multifamily sectors "appear poised to post improving core growth in the near term" despite weak demand for suburban office space. Still the analysts "believe that given current valuations for suburban office REITs and the pricing of more 'defensive' names in other property sectors, it is reasonable to consider 'renting' rather than long-term owning some suburban REIT exposure." "The focus for (third-quarter) earnings will likely be on the effect recent market turmoil, weak job markets and generally lackluster economy (are) impacting companies in terms of fundamentals, acquisition opportunities and pricing, and access to debt capital," KBW said. The analysts expect quality and location will continue to outperform market averages, particularly in retail and office; "hence REIT portfolios, in general, are outpacing market average vacancies." KBW expects acquisitions will drive external growth at many REITs in the near term, although tightened credit markets over the past two months slowed transaction activity that was higher earlier in the year. Write to Jason Philyaw. Follow him on Twitter: @jrphilyaw.