Rates Will Rise and Properties Will Offer Better Prices

The wall street journal is reporting that defaults in the commercial lending fund market and new federal regulations affecting commercial lending are about ready to take effect.  The convergences of these two events is very likely to both make commercial borrowing more difficult and rates rise from their currently historic lows.   We believe that Capitalization Rates, of which the cost of debt is a factor, will increase, which increases the returns required to offer a buyer and devalues investment properties.  

Another factor supporting this idea is raising bond yields (also contributing to increased interest rates) and an improving stock market.  Both of these investment alternatives compete for investment dollars and have been responsible for the low yields and high prices of commercial investment property.