One of the largest questions in CRE — maybe the single biggest one — is what will happen with capital markets. Valuations and rents can go up or down, but it's the cost of financing that most likely makes or breaks deals.
Right now, the biggest problem is uncertainty in future Fed moves and also with a lack of pricing discovery as markets realign.
"As the Federal Reserve continues its rate hikes to curb inflation, the capital markets have responded with overwhelming caution until there is clarity on when the Fed will stop and where interest rates are likely to settle," says Marcus & Millichap in a special report. "Several questions compound this uncertainty, including volatility in the stock market, geopolitical risk, decelerating rent growth, falling home prices, and cap rate inflation."
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