Monday, April 1, 2019

Low Mortgage Rates Here to Stay, Predicts The Real Estate Capital Institute®

John Oharenko
 Chicago, IL, April 1, 2019 – The Fed’s announcement to keep rates unchanged sent 10-year treasuries to the lowest levels since the end of 2017.  Discussions of any rate hikes this year are unlikely. 

Fed projects one hike for next year, and a rate cut may be justified should the economy start losing momentum.  For the foreseeable future, low mortgage rates are here to stay, as a strong job market is tempered by cautious consumer spending and reduced business investments. 

The executive director of The Real Estate Capital Institute®, John Oharenko, summarizes current financing conditions by noting, “The commercial realty markets feel flat, in step with the yield curve. Not too much up or down movement, just a little sideways.”

Noteworthy commercial mortgage pricing trends based upon leverage, term and rate structure are noted as follows:

Leverage:  Pricing on lower leverage debt of, say 50%, is extremely attractive, starting at 140 to 160 basis points over longer-term treasuries, and even lower for ‘prime’ deals.  Stepping up to 70%, spreads climb by nearly 50 basis points.   Full leverage loans of up to 80% (typically layered with Mezz debt), include another 50 to 75 basis points.  All in all, permanent debt featuring a ten-year term is generally priced in the 4%-to-5.25% range.  Additional 15-20 basis points discounts/premiums available depending upon project leverage and quality.

Term:  The ten-year term reigns as the benchmark timeline for permanent debt.  Given yield curve flatness, five-year debt is priced only 10 to 20 basis points lower.  On the other end of the spectrum, twenty-year debt is about 20 to 25 basis points higher.  Term elasticity is minimal, so longer-term debt remains desirable.

Rate Structure:  Adjustable-rate loans are priced within the 4%-to-5% range, gravitating towards the middle-range.  Similar to term funding dynamics, rate structure pricing is nearly inelastic, as adjustable and fixed-rate debt rates are very similar.  Also, mortgage spreads typically widen when treasuries significantly drop, as occurred last month.  Due to the substantial amount of capital chasing a limited amount of real estate projects, lenders are keeping spreads tight, or unchanged, to stay competitive in the market despite lower treasuries.

The Real Estate Capital Institute® is a volunteer-based research organization that tracks realty rates data for debt and equity yields.  The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR.  


 John Oharenko, Executive Director

 The   Real Estate Capital Institute®
900 North Campbell Avenue
Chicago, Illinois USA 60622

Marcus & Millichap Arranges $1 Million Sale of 18,400-SF Self Storage Facility in Lakeland, FL

Lakeland Self Storage, 2326 West Memorial Boulevard
Lakeland, FL

LAKELAND, FL – Marcus & Millichap (NYSE: MMI), a leading commercial real estate investment services firm with offices throughout the United States and Canada, has announced the sale of Lakeland Self Storage, a 18,400-square foot self-storage located in Lakeland, FL, according to Colby Haugness, regional manager of the firm’s St. Louis office. The asset sold for $1,040,000.

Anne Williams

Anne Williams and Marla Čolić, investment specialists in Marcus & Millichap’s St. Louis office, had the exclusive listing to market the property on behalf of the seller, a private investor. 

 The buyer, a private investor, was secured and represented by  Williams. Čolić and Ryan Nee - Regional Manager, Broker, assisted in closing this transaction.

Lakeland Self Storage is located at 2326 West Memorial Blvd. in Lakeland, FL.  The property includes 122 non-climate-controlled units and 22 climate controlled units and currently maintains an 80 percent occupancy rate. Lakeland Self Storage was built in 2005 and includes asphalt drives and metal construction.

Marla Colic

About Marcus & Millichap (NYSE: MMI)

With nearly 2000 investment sales and financing professionals located throughout the United States and Canada, Marcus & Millichap is a leading specialist in commercial real estate investment sales, financing, research and advisory services.

Ryan Nee
Founded in 1971, the firm closed 9,472 transactions in 2018 with a value of approximately $46.4 billion.
 Marcus & Millichap has perfected a powerful system for marketing properties that combines investment specialization, local market expertise, the industry’s most comprehensive research, state-of-the-art technology, and relationships with the largest pool of qualified investors.


Colby Haugness
Regional Manager, St. Louis
(314) 889-2500

Stephanie Carten
Marketing Coordinator
Marcus & Millichap
5900 North Andrews Avenue
Suite 100
Fort Lauderdale, FL 33309
(954) 245-3477 direct
(954) 245-3400 main
(407) 625-9793 mobile
(954) 245-3410