Office Investors Anxious Over Interest Rate Hikes

Tim Lee is the VP of corporate development and legal affairs at Olive Hill Group.

Interest rates are among the top concerns for office investors this year. This year, interest rates are expected to increase nominally several times. The incremental changes in interest rates could have a big impact on the capital stack for investors, according to Tim Lee, VP of corporate development and legal affairs at the Olive Hill Group. The firm has been very active in Los Angeles, but is shifting its strategy this year to look outside of the California market. Although it is optimistic about the year ahead—Lee says that the fundamentals remain strong—interest rates are one of its top concerns.

“For us, interest rates are very important. Some of the key threats that we are looking at in the first half of this year is focused on interest rates,” Lee tells GlobeSt.com. “That will affect how the capital stack goes. In some instances where debt has become more expensive, we are seeing that ourselves and other investors are increasing the amount of equity that they are putting into deals and lowering the amount of debt because there is so much equity that needs to be placed. There is a backlog of equity that has been waiting on the sidelines.”