HOUSTON—Commercial real estate values are widely expected to hold the line in 2018, according to valuation experts surveyed by Situs RERC. Meanwhile, most expect the “tremendous” CRE price growth we've seen over the past cycle to continue, and also that “the eventual correction in values will be minimal.”

Eighty percent of those surveyed said CRE values would remain the same next year, while 20% predicted they will increase by 1%. The experts surveyed by Situs RERC also felt that cap and discount rates lately have moved from being “reasonable” to “aggressive,” reversing a trend they've seen over the past two years, although they're expected to remain generally flat over the next 12 months.

Along similar lines, Situs RERC's valuation trends experts considered CRE overall to be overpriced relative to value during the third quarter, a shift of opinion that represents “a significant change” from Q2, when they believed assets were fairly priced relative to value. In fact, Situs RERC says the overall value vs. price rating for Q3 was the lowest recorded since the company began compiling the ratings in Q2 2014.