canvas togler
Back to all news

US Commercial Real Estate Values Threatened by Stagflation

Stagflation is likely to lead to lower US commercial real estate (CRE) valuations, Fitch Ratings says in new analysis of factors that could affect CRE prices. Inflation and weak economic growth could result in modestly growing or declining nominal net operating income (NOI) from soft tenant demand and elevated capitalization (cap) rates reflecting a higher risk premium.

Changes in nominal CRE values are typically accompanied by similar directional movements in NOI, and values increase in most sustained rising interest rate periods. During these periods of rising long-term interest rates, property-level cash flows tend to keep pace with, or grow faster than, the increase in cap rates tracked by the American Council of Life Insurers. However, stagflation could result in a prolonged period of elevated cap rates, which would likely result in declines in CRE values.

Join Our Email List

By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact