ears of warnings that rising Treasury rates would depress commercial real estate prices—during an extended period when rates stayed low and acquisition yields fell to record lows—have given the concept a “boy who cries wolf” quality.
Those warnings, however, will be tested now that the 10-year Treasury seems poised to continue its growth of the past 18 months, and volatility has roiled the bond and equity markets. No longer can the market rely on the unusually large premium between Treasury rates and cap rates to buffer the impact of higher interest rates and the likely increase in mortgage coupons.
Read more...As Interest Rates Rise, Where Do Valuations and Transaction Volumes Go?
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