David Shulman David Shulman is a senior economist at the UCLA Anderson Forecast.

For the last three years, commercial real estate pricing had stalled, increasing at about 2.1% per year through April 2019, according to a new letter from UCLA Anderson Forecast and the UCLA Ziman Center for Real Estate. However, a recent reverse in interest rates could actually fuel commercial real estate pricing in the near term. The Fed is expected to reverse its quantitative tightening policy and decrease rates in July, and the 10-Year Treasury rate has dropped in response to fear of a recession. The event could shift cap rate and pricing expectations through the end of the year.

“Prices plateaued because interest rates were going up, but because of the recent drop in the 10-Year Treasury, prices might pick up in the near term. I am not as pessimistic as I was before,” David Shulman, senior economist for the Ziman Center and UCLA Anderson Forecast and the author of the recent letter The Good, The Bad and The Ugly, tells GlobeSt.com. “I was expecting the 10-Year Treasury to be well above 3% by now, but they are just a touch above 2%. That has taken some pressure off of cap rates on the pricing side. Prices for the past three years have leveled off, but they might accelerate from here. It won’t be by a whole lot, but it is less likely that you will get a price drop this year, which I thought we might see.”

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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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