RealtyRates.com Investor Survey Reports Modest Cap Rate Index Increases For All Property Types During 4th Quarter 2023
Consistent with a 33 basis point increase in Treasury rates to which most commercial mortgage interest rates are indexed, together with a four basis point decrease in equity dividend rates, the RealtyRates.com Weighted Composite (Cap Rate) Index increased 16 basis points from 9.79 to 9.95 percent during the 4th Quarter of 2023.
Meanwhile, the smallest quarter-over-quarter cap rate index increases were recorded by the Apartment and Industrial sectors, both up 14 basis points during the 4th Quarter.
Mortgage lending standards tightened on weaker demand and higher risk for all commercial real estate loan categories during the 4th Quarter. Meanwhile, although spreads were down 11 basis points overall, average permanent mortgage rates were up 22 basis points.