Which Sectors Can Withstand the Next Downturn?

Muoio: “Cap spreads to treasuries are relatively wide, so there is room for spread compression to offset rising interest rates to varying degrees by property segment.”

IRVINE, CA—While no segment is invulnerable to the impact of a cyclical downturn, projections have apartment demand slowing, but not halting, in the event of a downturn, making it one of the stronger sectors, Ten-X’s chief economist Peter Muoio tells GlobeSt.com. According to a recent report from the firm, four of the five sectors tracked—all except hotel—outperformed their 10-year averages in terms of deal volume, and in terms of cap rates, the apartment and retail sectors have reached new cyclical lows, while industrial and hotel also declined. We spoke exclusively with Muoio about the various sectors and what he sees for their future.

GlobeSt.com: How do you see pricing and cap rates changing for the office, industrial, retail and multifamily sectors over the next couple of years?