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| John Oharenko |
Chicago, IL -- The domestic economy momentum continues an upward trajectory since bottoming out from the pandemic last spring, according to Chicago-based Real Estate Capital Institute (RECI).
The unemployment rate is now about
half as low, the stock market and other financial indicators hit record
levels.
The Real Estate Capital Institute’s® Director, John Oharenko, suggests, “Less economic [and cash flow] uncertainty translates to better pricing in what continues to be a seller’s market.”
Cap
Rates: Overall capitalization rates for CRE
assets range from 3.5% to 8%, with a wide variance based on property type,
grade, and cash flow quality.
Capitalization
rates for prime multifamily assets dip down to the mid-3%-range, Industrial
properties price slightly higher, with net-lease commercial properties not far
behind, hovering in the 4%-5% range.
Retail and office projects indicate higher risk, falling within the 6%-plus-range. And lodging properties show more recovery hovering in the 7%-or-more range as travel and meeting business returns.
Non-prime
properties in various asset categories typically offer widened pricing by 50 to
100 basis points.
Mortgage Rates: Despite inflation fears, interest rates remain tame. Cheap debt drives low caps. Even as benchmark rates rose over more than fifty basis points since the beginning of the year, mortgage rates stay low.
Lenders absorb tighter spreads due to more comfort with improving realty market fundamentals. Short-term debt for prime assets dips below 3%, while longer-term perm loans hover in the 3% to 3.75% range.
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.
CONTACT:
John Oharenko
Executive
Director
director@reci.com / www.reci.com
The Real Estate Capital Institute®
Chicago, Illinois USA 60622
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