3rd Quarter, 2022

Market Commentary™ Investor Survey Reports Cap Rate Index Increases For All Property Types During 2nd Quarter 2022

Coincident with an 84 basis point increase in Treasury rates to which most commercial mortgage interest rates are indexed, together with a seven point decrease in equity dividend rates, the™ Weighted Composite (Cap Rate) Index™ increased 43 basis points from 8.83 to 9.26 percent during the 2nd Quarter of 2022.

The greatest quarter-over-quarter cap rate index increases during the 2nd Quarter were recorded by the Lodging and Self Storage sectors, up 48 basis points, followed by the Mobile Home/RV Park sector, up 46 basis points.

The smallest quarter-over-quarter cap rate index increase during the 2nd Quarter was recorded by the Restaurant sector, up 35 basis points, followed by the Apartment sector, up 37 basis points.

Mortgage lending standards tightened on weaker demand for most commercial real estate loan categories, except those secured by multifamily residential properties, for which demand strengthened during the 2nd Quarter. Weaker demand for construction and land development loans and for non-farm, non-residential loans was also reported. Meanwhile spreads were down six basis points overall, but average permanent mortgage rates were up 78 basis points.

Historical Cap Rate Indices

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