The markets have become "choppier and murkier" as inflation and rates rise, according to a new analysis from a trio of Cushman & Wakefield economists. 

"History suggests that CRE markets have been largely resilient to higher inflation and rising rate environments as long as the economy keeps growing. That said, we are in unprecedented times," the firm's David Bitner, Kevin Thorpe, and Rebecca Rockey write in a new report modeling a variety of economic scenarios. They note that CPI inflation is currently at 8.2% YOY, a four-decade high, and say there are "increasing signs" that recent interest rate hikes, together with market uncertainty, is putting upward pressure on cap rates. In addition, REIT implied cap rates have already ticked up.

But "at the same time, many economic fundamentals remain strong, and investors have accumulated enormous amounts of capital to deploy into CRE—that genie isn't going back in the lamp," the report notes. "Strong headwinds continue to collide with strong tailwinds, creating many different scenarios, some more likely than others."