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Staying Ahead of the Curve
With the Federal Reserve holding interest rates steady for the fourth straight meeting, investors are speculating about when or if the nation's central bank will begin to cut rates. With the 10-year Treasury rate hovering around 4.7% and having fluctuated 80 basis points throughout the year (4.40%-5.20%), ending only 20 basis points higher than 12 months ago. What does this mean for the commercial real estate market? Historically, the rise and fall of capitalization rates in correlation with the adjustment of the 10-year can be highly observable as demonstrated in the graph below. With the future uncertainty of the movement around the 10-year, investors will want to stay ahead of the curve and take advantage of historically solid market conditions.  Deals: January 2006- Washington Green (Party City, Circuit City Anchored) - 6.00% June 2006- Colonnade Shopping Center (Pet Smart, Office Depot, Best Buy Anchored) -6.67% October 2006- Meridian Place (Pier 1, Michaels, Sports Authority Anchored) – 6.29% |