Roofstock Research took a deep dive into the current commercial real estate (CRE) value cycle, from the peak in value in the second quarter of 2022 through the first quarter of 2024, and compared it to the three previous CRE value cycles. The analysis was done largely from the perspective of the relative yield offered by real estate versus the so-called “risk-free” rate of the 10-Year Treasury Note. We used data from the NCREIF Property Index, so it is reflective of current value or appraisal-based values and cap rates and not transaction values and cap rates. Our analysis concludes that there is considerable downside risk in the current value of real estate held by institutions due to interest rates, tight monetary policy, and the extremely low cap rate spread over the 10-Year. By comparison, past value cycles found a bottom with the help of a much more accommodative interest rate and monetary policy environment that drove cap rate spreads to far more attractive levels than we are seeing today. Read the full report here: https://lnkd.in/eqZxhaiv Subscribe to our email distribution list here: https://lnkd.in/e4YArAz3
CRE Analyst
8mo
Does this chart reflect the total NPI (including income) or the NPI value index?
Seasoned Real Estate and Institutional Capital Markets Professional
8moI always tell my sudents that the 1990s real estate bust was the "real deal". Looks like your data confirms it. The GFC bust felt less bad - perhaps because it was much more of a V-shaped recovery.