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Interest Rate Spreads Expected to Hold Steady
The overwhelming majority of 110 CRE lenders and underwriters surveyed by Integra Realty Resources (IRR) expect interest rate spreads to remain steady over the next six months for office properties (83%) and multifamily properties (75%). The Denver-based firm released its 3Q 2017 Interest Rate Survey, which reflects of interest rate spreads across the U.S. commercial real estate industry.
Over the past six months, spreads have compressed across all multifamily property types and LTV ranges, except for student housing on deals with an LTV of 76% to 85%.
Other key IRR survey takeaways:
- Single-tenant non-credit office deals have experienced significant interest rate spread compression since Q1 2017.
- 16% of survey respondents expect interest rate spreads of retail properties to decrease over the next six months. The highest for any property type.
- 8% of survey respondents expect interest rate spreads of industrial properties to increase over the next six months. This is a major drop off from the Q1 2017 interest rate survey when ~40% of survey respondents called for an increase in interest rate spreads.
- 50% of survey respondents expect interest rate spreads of lodging properties to increase over the next six months.
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