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Investors Shift from Values to Income Stream

CBRE's Chris Ludeman doesn't foresee meaningful cap rate compression in the next few years, regardless of how strong GDP growth proves to be.

By Paul Bubny | Updated on January 12, 2018

CBRE's Chris Ludeman “When I’m talking to capital, I don’t sense that capital is going to hold assets longer,” Ludeman says.

LOS ANGELES—The road ahead could lead to robust economic growth or to a slowdown, each with broad implications for commercial real estate values. In either case, investors should not look to asset appreciation as a given when calibrating their near-term strategies, CBRE’s Chris Ludeman tells GlobeSt.com.

Partly this is due to the age of the current cycle, in keeping with historical norms. “As we get longer in the cycle, where there’s less cap rate compression, investors rely more on property performance to drive value,” says Ludeman, global president, capital markets at CBRE. ‘And that’s what has happened.” The increasingly small share that price appreciation has had in the NCREIF Property Index’s quarterly returns lately is a case in point.

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