While there are widespread concerns about inflation, so far, the rise in interest rates has been because of better growth prospects, according to Cushman & Wakefield. Those positive dynamics also mean good things for real estate fundamentals.
Right now, the market is indicating that "unanchored inflation" is unlikely, according to Cushman & Wakefield. It says low interest combined with transparency from The Federal Open Market Committee justifies the valuation of interest-rate sensitive assets.
Despite the pandemic, there has been little movement in headline cap rates since December 2019. Across product types, cap rate spreads are elevated above the long-term average by about 100 basis points. "This indicates an ability to absorb upward movement in the cost of capital without imminent pricing downsides," according to C&W.
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.
Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
