X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Recent stats suggest the real fun may be coming to an end. It appears the since may CRE values have begun to flatten or even decline slightly. It would seem this is due to a combination of things and may be more than a short term blip. Interest rates are rising over time and are up by around 100 basis points since the bottom several months ago.  While rates have seemed to flatten for the moment, there is no question they will be rising over the next few years and the ten year could go back to its more normalized levels or 5% or even 6% eventually. There is no certainty that the fed will unwind QE in a good way, and the flood of capital in the system is very likely to trigger inflation and possibly higher rates in a few years.  If Yellin gets the position, then she is likely to be in favor of continued easy money. It is unclear what Summers will do. However, economic theory strongly suggests that such a flood of liquidity in the system will eventually create an inflationary push up. That means more pressure on rates than would occur only form the normal improvement in the economy. As rates rise, cap rates rise accordingly and so there is downward pressure on values. When and how much is the great unknown.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.