![]() ![]() I believe the 10-year notes will level at around 4-4.25% percent this year. These behemoth money managers are constantly seeking return and might view commercial real estate as a safe haven to earn some additional juice. This is good news for borrowers, bad news for savers and could cause an uptick in institutional buying activity. The rate this morning is slightly above 3.8%. We saw a peak in Treasuries occur last year when the 10 year T-note eclipsed 5%. Last year, for the first time in a couple of decades, you could actually make money on idle cash. Therefore, beware of the Black Swan event. We were rocking along when a microscopic foe sent us to our spare bedrooms. However, I’m reminded of our status in January 2020. If this proves to be the case, the Federal Reserve may be persuaded to delay cuts in interest rates, which are predicted for this year. Specifically, will the Red Sea shipping lane disruption cause inflationary pressures on goods delivered? I believed in the resiliency of the United States economy, especially the consumer, and we skated by a recession in 2023.Īs I write these predictions today, the only storm clouds I see on our horizon are global uncertainty in the Middle East. Recall, a recession is a decline in gross national product for at least two quarters. Last year, I took a contrarian approach and predicted we would avoid a recession in 2023. When will the maturing debt be repaid? Thus, pressure to dispose of the new build. Your lender might be getting a bit nervous. Today, you’ve delivered a new building into an entirely different market with longer vacancy and lower rates. Your calculus was based upon conditions in early 2022. You considered construction costs, time to build and lease. Imagine you’ve originated a short-term construction loan to build a Class A structure. ![]() By that, I mean an owner awaiting a tenant may choose to sell.Īnother catalyst could be the underlying debt on the asset. The forces outlined in the paragraph above will trickle into the sales world. Hmm, someone will get motivated and make a deal, comps will reset to the new level and the frenzy will begin. Two tenants also left the market last year. At last count, Orange County had 11 such buildings open for business and seeking a resident. We knew someone would drop their rate to secure a great tenant.Įxpect more of the same this year, especially with Class A buildings above 100,000 square feet. We tracked new avails and ones leaving the market and noticed an imbalance. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |