Recent optimism that the CRE investment market had hit bottom and was primed for a rebound has begun to wane within the past few weeks as a backup in the Treasury has essentially paused dealmaking.
Yields on 10-year Treasuries have recently increased on stronger-than-expected economic data, causing uncertainty about future rate cuts. While CRE investments won't grind to a halt, investors are pausing to evaluate how much rates might continue to drop and at what pace before they commit to new deals, said Madison Realty Capital co-founder Josh Zegen during an interview on Bloomberg TV.
"It's very hard for investors to make a market between a 3.5 and a 4.5 Treasury," said Zegen. "They really need more of a tight band with four to six months of consistency to start committing to new deals, and that's a real challenge for the sector in general."
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