The one component of commercial real estate that appears to be on solid footing and expanding is the industrial sector. Average rents have increased while vacancy rates remain low, according to CommercialEdge.
However not even industrial can escape the current volatility in the capital markets and the effects it is having on valuations.
"Given the rise in mortgage rates and the tightening of underwriting standards enacted by banks in recent quarters, many properties refinanced today could net 20% to 30% lower profits than they did at origination," the report cautioned. On the other hand, it notes that "many industrial loans coming up for refinance will have the benefit of increased revenue during loan seasoning."
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.
