James Costello

JAMES COSTELLO is a senior vice president with Real Capital Analytics and a member of ULI’s Industrial and Office Park Development Council (Black Flight) product council.

Interest rates have been on a roller-coaster ride over the last year, but cap rates are largely unchanged. The result of these moves is that cap rate spreads relative to the safe investments in the 10-year U.S. Treasury bonds have moved back to the levels seen in 2017. Given everything that has changed over the last year—as well as everything that has not—there may be room for cap rate spreads to move lower.
Commercial property prices continued to rise across the largest gateway markets globally in 2018, according to data provided by RCA, but the pace of growth slowed from previous years. Cities in the Asia Pacific region, including Melbourne, Seoul, and Singapore, led the pack in the latest “RCA CPPI RCA’s Global Cities” report rankings.
In addition to the gyrations of the stock market, the rate on 10-year U.S. Treasury notes surged past the 3 percent level into late September and early October. And yet, even with the turmoil in the financial markets, cap rates were unchanged to down from a year earlier in the fourth quarter.
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