The Rate and Price Impasse: Navigating Today's Commercial Market

By Managing Broker Adam Shultz

Buyers continue to wait and hold firm in conservative pricing models either hoping for desperate sellers or lower rates, in order to help transactions move forward. Thus far, neither of those two items seem to be happening very quickly. Rates have pretty much been range bound at elevated levels for an extended period and sellers are holding in there at strong asking prices with the exception of most office product which we’ve witnessed sellers have to get very realistic on taking large price reductions in order to make deals happen. That said, I have fielded a few calls from lenders lately on a couple of distressed assets so it’s possible the patient, conservative buyers may have some even better deals headed their way soon. Given the amount of low interest debt coming due in the next few years that needs to be refinanced at higher rates, it will certainly be interesting to see if owners have the wherewithal to step up and meet any necessary cash calls, or if they exit stage left on underwater deals opening the door for the patient buyers to step in.

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