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Investment activity has been healthy in the first half of the year, driven by strong economic fundamentals and plenty of liquidity. Still, there are potential challenges on the horizon—namely rising interest rates. Short term rates have already increased several times, and are expected to rise again this year, compressing spreads. Lenders are already increasing production targets for next year in search of yields.

“While it is hard to determine timing of short-term rate increases, which might happen one more time this year, we are seeing spreads continue to compress, and all-in coupons remain near historic lows,” Natalie Dahl, the new managing director of investor services at CBRE in San Diego, tells GlobeSt.com. “Life insurance companies, foreign and domestic banks, debt funds and CMBS lenders have increased their production targets for 2019 in search for yield. Although highly liquid, the debt markets remain to a certain extent inefficient as some lenders still struggle with lingering regulation from the previous administration.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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