CBRE EA BLOG Deconstructing CRE

  • December rate rise: Fed raises rates as expected; three more hikes likely in 2018

    Dec 14, 2017, 13:42 PM by Jeff Havsy
    The Federal Reserve has raised the federal funds rate 25 bps, to a target range of 1.25% to 1.50%. This was the Fed’s fourth 25-bps increase since December 2016 and was widely anticipated given the economy’s recent near-3% quarterly growth, robust job growth, record-low unemployment, modest wage gains and rising consumer and producer prices.
  • Three-year outlook: Capital appreciation in U.S. CRE assets unlikely; investors should focus on income

    Nov 2, 2017, 14:07 PM by Serguei Chervachidze
    Across the range of likely macroeconomic scenarios, appreciation returns—the mainstay of CRE returns over the past five years—are on hold for the next three years.
  • September rate unchanged: The beginning of quantitative tightening? Not quite

    Sep 22, 2017, 13:59 PM by Jeff Havsy
    At its latest meeting, the Fed kept the federal funds rate at 1.0%-1.25%. An increase is expected in December, with economic conditions generally good. Commercial real estate fundamentals remain strong, and a Q4 rebound in economic growth should keep them healthy at least through H1 2018.
  • Fed Watch: Indecision by committee

    Mar 31, 2017, 12:18 PM by James Bohnaker
    Most FOMC members agree that rates will need to head higher in the next few years, but how quickly is a source of great debate. Don't be surprised to see even greater indecision as uncertainty rises later in the cycle.
  • March rate rise: Fed looks to get ahead of inflation

    Mar 15, 2017, 15:05 PM by James Bohnaker
    Upward pressure on cap rates is expected, muted by strong capital flows from foreign and domestic institutional investors. CRE fundamentals remain strong overall, and improved business and consumer confidence may lead to enhanced late-cycle tenant demand.
  • Higher interest rates a risk for CRE values, recession or not

    Mar 8, 2017, 11:51 AM by Serguei Chervachidze
    With the new administration at the reins and macroeconomic indicators sending mixed signals, investors are wondering what the future promises for the direction of the U.S. economy commercial real estate. This seems to be certain in investors’ minds: interest rates are likely to increase—at least in the medium term, if not in the long run. What would such increases imply for CRE, and particularly for CRE values?
  • Interest rates and cap rates: A tale of two scenarios

    Jan 31, 2017, 14:47 PM by Serguei Chervachidze
    How will rising U.S. interest rates affect cap rates? It depends.
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