Rate hikes continued to dominate the commercial real estate headlines in Q2, as rates reached a 20-year high, and the overnight rate crested five percent.
- Continued raises have further dampened the investment market, as uncertainty continues in the lending market.
- Overall investment volume remains muted due to the uncertainty regarding return-to-office, and lender hesitancy to participate in the office market.
- Assets more tied to fundamentals, such as population growth and the job market, continue to perform well.
- Yields are expected to level off for many assets, with the outlook for Q3 cap rates flat for hotels, many industrial markets, secondary apartment markets, and stronger retail assets.
Investor demand for multi-family remains strong, with limited new supply and rental growth driving performance in existing buildings. The total volume of multi-family transactions for Q2 was $559 million. The largest transaction was the acquisition of 1225 York Mills Road by Realstar for $84.7 million.
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