Interest rates are not only playing a negative role in residential real estate, they are also impacting the commercial real estate (CRE) market, which recovered earlier this year. Commercial real estate prices have fallen nearly 13% so far from their most recent peak earlier this year, according to Greenstreet, a real estate and real estate investment trust (REIT) research firm, and in October alone he fell 7.3%. % is down.
of Green Street Commercial Property Price Index also reported Apartments, offices, strip malls and healthcare properties are also experiencing double-digit declines. Hospitality and facilities housing his self-storage business improved slightly, down just 6%.
“The higher the bond yield, the higher the cap rate,” said Peter Rosamund, co-head of strategic research at Green Street, adding to the disappointing outlook. “I don’t think we’re out of the woods, even if the price drop was big.” Stated.
The Fed has already hiked rates six times this year and is far from over as Fed Chairman Jerome Powell seeks to stem inflation. According to Forbes, investors are planning another rate hike in December, and a smaller rate hike in early 2023.
Naturally, astute investors are ready to pounce and distressed asset values will be very popular. The best investment opportunities usually come during recessions.
Marcus & Milichup’s John Chan told Globest.com: “It’s natural to be cautious, but on the flip side, many investors either stay aggressive or let other investors take their hands. Even if I pull it, I’m getting better,” he said. “Often the deals they make at this time of year offer the strongest returns over the long term.”
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