Despite commercial real estate lending being down a bit from last year, CRE pricing, including medical real estate, is a record-high levels. Values have increased 6.5% from 2017 to the first half of 2018, pushing cap rates even lower. Even though all sectors of commercial real estate have seen an increase in values, apartments, industrial and suburban office have seen the largest bumps in value. Prices have increased steadily year after year, though not at the same level seen during the first few years of the economic recovery.
The RCA Commercial Price Indices (RCA CPPI), formerly Moody’s/RCA Commercial Property Price Index, projects that commercial real estate prices will rise by an average of 5% over the next three years (6% in 2018, 5% in 2019, and 4% in 2020).
While some industry experts believe we are nearing the end of this boom cycle, others believe that due to high demand and a strong economy, this continued expansion and associated pricing increases could continue for several more years.
Sources:
https://www.bisnow.com/national/news/capital-markets/were-close-to-the-top-of-the-market-6-commercial-real-estate-capital-flows-trends-to-watch-for-93832
https://urbanland.uli.org/capital-markets/real-estate-economists-remain-positive-on-economy-and-industry/
Real Capital Analytics, Inc. (RCA)
