By Marcus & Millichap’s Research Services
Economic Outlook Placing Pressure on Interest Rates
- The Georgia Senatorial run-off results reduced political uncertainty and raised the chance of additional stimulus
- This has strengthened the 2021 economic outlook
- As a result, the 10-Year Treasury is back up to 1.1% from 0.5% back in August, but still far from 1.8% a year ago
Rising Rates Already Impacting Commercial Real Estate
- Apartment loans have seen rates rise 30-40 basis points over the last few weeks to the upper 2% to mid-3% range
- Quality Office & Industrial rates run in the low 3% range; Retail Centers & Self-Storage can fall in mid-to-upper 3%
- Hotels financing remains challenging, but available
Upward Momentum Likely to Continue
- Advancements in the economic and health care fronts are signals that interest are likely to continue rising
- Diminishing uncertainty is also taking more investors off the sidelines, increasing competition in the market
- For inventors who plan to buy this year, locking in these favorable rates may prove beneficial in the long-ter
* Average cap rate through December 2020; 10-year treasury through January 13, 2021
Includes apartment, retail, office, and industrial sales $1 million and greater
Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics, Federal Reserve