Headline inflation reached 5.4% in June, its highest level since 2008; well above Fed target of 2%
- Fed believes inflation is transitory, driven up by short-term logistical bottlenecks and surge in consumption
- Likely trying to keep interest rates low and money flowing
What are the Factors Driving Inflation?
- Some inflation drivers are transitory, like commodity prices
- But other strong drivers, such as rising wages and housing costs, tend to remain in place longer
- If the inflation risks remain, Fed may be forced to take action earlier than expected and raise interest rates
Why Commercial Real Estate Investors are Well Positioned
- Apartment, Industrial and Self-Storage saw strong Y-O-Y rent growth in 2Q, underscoring CRE’s inflation resistance
- Low interest rates and high liquidity create great buying conditions, but future rise in rates may limit this window
- High buyer demand also provides a prime opportunity for sellers that want to cash out or switch property types
* Through June
Sources: Marcus & Millichap Research Services, BLS