The markets are pricing in five, quarter point interest rate increases in 2022 which will result in commercial mortgage rates ranging between 4 to over 5 per cent.
What will be the consequences of this increase to the commercial real estate investment market?
Any discussion on cap rates needs to be prefaced with a cautionary note.
That is, there are many factors that determine capitalization rates on a commercial real estate investment.
Those factors include but aren’t limited to age and condition of improvements, covenant of tenants, term of leases, location, asset class and the tenant mix.