The combination of inflation and major geopolitical events, like the Russia-Ukraine conflict, has created a more volatile market environment for commercial real estate investment and higher interest rates. In the first quarter alone, the cost of fixed-rate debt is up 80 basis points, on average, and floating-rate debt is up 20 basis points, according to data from Chatham.

“While there was a moment of dramatic spot volatility as capital came flooding back to the U.S. Treasury market in a flight to safety, pushing yields into the low 1.7%’s, it seems as though the Treasury market may be pursuing its previous course of rising yields in response to indications of a rising Fed Funds rate,” Jaran Burt, director of valuations at Chatham, tells GlobeSt.com. “The Fed has indicated its intention to combat inflation by raising interest rates, so while capital may get more expensive, there is no indication of a looming collapse of liquidity in the capital markets due to the conflict in Ukraine.”

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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