Limited listings could drive competitive property pricing
CBRE has released the results of its latest Investor Intentions Survey, revealing mostly positive findings. Among the firms surveyed, 54% expect investment activity to recover in the first half of 2025. Optimism about individual portfolios was even higher, with 75% of respondents anticipating their own investment activity to rebound during the same period.
The greatest obstacle to investment, according to respondents, remains “elevated and volatile long-term interest rates.” Despite former President Trump’s recent declaration that he would push for interest rates to decrease, CBRE forecasts that rates will stay above 4% through the end of the year. Even if the Federal Reserve lowers the base rate, it may not significantly reduce rates for commercial property loans. Many banks that ceased lending to commercial real estate when rates rose have yet to return. Their replacements, such as debt funds and private lenders, typically charge higher rates, further increasing borrowing costs...
The greatest obstacle to investment, according to respondents, remains “elevated and volatile long-term interest rates.” Despite former President Trump’s recent declaration that he would push for interest rates to decrease, CBRE forecasts that rates will stay above 4% through the end of the year. Even if the Federal Reserve lowers the base rate, it may not significantly reduce rates for commercial property loans. Many banks that ceased lending to commercial real estate when rates rose have yet to return. Their replacements, such as debt funds and private lenders, typically charge higher rates, further increasing borrowing costs...
RSK: The last paragraph hits the nail right on the head. There are very few properties on the market and most of them do not make economic sense...even for a user. One of our investor groups had a building burn down and received the insurance proceeds. Looking to build with the high construction costs didn`t seem to make sense. But even with the substantial large down payment, nothing currently on the market breaks even. Seems better off to pay the cap gains and keep the cash.
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- - Volume: 25 - WEEK: 5 Date: 1/28/2025 2:49:44 PM -