The recent surge in interest rates is pushing the commercial real estate sales recovery out further, according to Marcus & Millichap CEO Hessam Nadji. Nadji said the market had been on a good trend line of additional sales coming off the 2023 bottom, but the latest rate rise poses a challenge for deals already underway and for fresh listings that were priced before the move. He noted that a 25 or 50 basis point movement in interest rates makes a big difference in commercial real estate valuations, though buyer demand remains strong and less rate-sensitive than in the past because prices have already adjusted. Nadji said clients who had waited three years for a recovery and a so-called Fed miracle are now bringing product to market, and that maturing loans north of 800 billion dollars this year will act as a catalyst for even more sales later this year and into next year. On opportunities, he said most properties are 20 to 30 percent cheaper than at the market peak, with office seeing the biggest price correction and multifamily down around 20 percent, and he singled out multifamily and small retail as particularly compelling, with some clients using an all-cash strategy.
Marcus & Millichap IncCEO says the recent interest-rate surge is delaying the commercial real estate sales recovery and disrupting deals already underway.
