WASHINGTON, DC—Commercial property asset values have been steadily rising since the end of the recession, bolstering the sector’s recovery and providing hope that the next wave of debt maturities will be able to find refinancing.
Could that streak be coming to an end? Survey respondents—at least some survey respondents–to the Real Estate Roundtable’s Q2 Sentiment Index think it is possible.
Despite improving net operating income, views on future asset values are mixed: Some respondents believe that a looming uptick in interest rates will cause cap rates to rise; others say there is some cushion given the current cap rate spreads.
A chart from Green Street Capital last month shows just how much the pace of appreciation has slowed since last summer. Cap rates haven’t changed since last summer, but higher property income means values have been slowly moving higher, Peter Rothemund, an analyst at Green Street Advisors, said when the Green Street Commercial Property Index was released at the beginning of April.
“That pattern probably continues for a while.”