Investors, institutional and individual alike, have maintained their interest in real estate, especially in multi-tenant properties of all types. One factor supporting the values are the low interest rates, which Stofer says have supported the market through the recent unsteady times. Despite falling rents and high vacancies, building owners are able to hit a single-digit return on their holdings because the debt they are servicing is at historically low levels, he says.
"If interest rates turn up, as some suggest will happen over the next year, some of the more highly leveraged buyers with floating loan rates could be headed for trouble,'' Stofer says. Many investors with qualifying property and a long-term perspective are locking in long-term debt in recognition of the fact that rates are unlikely to go much lower, he says.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
