CHICAGO—The gap in pricing expectations will continue to make an impact on commercial property transactions in the coming year, the National Association of Realtors' Lawrence Yun said Friday. However, Yun told attendees at the 2017 Realtors Conference & Expo here that secondary markets will experience sustained demand and stable real estate prices.

“The commercial market should expect a standoff between buyers and sellers over price in the next year, which could lead to fewer transactions,” said Yun, chief economist with NAR. “Buyers cannot offer low cap rates because of rising interest rates, and sellers cite the strong economic climate as a reason for high prices. Furthermore, vacancy is falling, yet construction has been lagging because of worker shortages.”

Yun and JLL chief economist Ryan Severino both expressed confidence that the commercial sector should remain on an upward trajectory, though. “The economy is quite impressive and gross domestic product has grown 3% in the past quarter, despite hurricanes and other economic factors,” Yun told NAR conference attendees. “The consumer confidence index is also growing, and the nation's net worth and consumer spending are at historic levels.”