Five-year and 10-year (AAA-rated) CMBS spreads remain in the mid 40s and mid 80s, respectively, and have been there for most of the year. Cushman & Wakefield notes that there has also been an increase in full-term interest-only loans from CMBS lenders from 42% in 2017 to 56% year-to-date.

“As we approach the fourth quarter, insurance companies that are ahead of allocation are becoming more selective, but the bank market has been more aggressively pursuing seven- to -10-year loans to take advantage of the void,” C&W states.

C&W Research in its recently released Capital Markets MarketBeat report noted that in the first two quarters of this year there was a modest increase in transaction activity, but the brokerage firm predicted that it does not expect any acceleration, which will lead to a slight decline projected for the full-year of 2018.

With the economy posting 4.1% real GDP growth in the second quarter of this year, along with other bullish economic data points—unemployment at near all-time lows and inflation that remains contained—C&W states that there are few signs of systemic imbalances that would threaten the onset of recession.

“Recent concern over tariffs contributed to increased public market volatility without having any identifiable negative impact on commercial real estate fundamentals, reinforcing commercial real estate as more attractive on a relative basis,” the report concludes.