Commercial Real Estate Favored Despite Rising Interest Rates

A recent bank survey - The Survey of Lenders' Commercial Real Estate Perspectives for 2006 - has revealed that higher interest rates will not deter investors' appetites for commercial real estate.

Article Via Yahoo Finance

While slightly more than 60% of bankers surveyed anticipate higher interest rates in 2006, they expect that commercial real estate will remain relatively healthy with no increases in delinquencies and defaults. Three-quarters of respondents foresee continued stability in rents and occupancy levels in 2006. Almost 60% of bankers expect cap rates to rise in 2006, and 37% believe they will stabilize at current levels.

Not a single banker projects lower interest rates in 2006.

Despite the specter of rising rates, acquisition activity will remain at current levels, according to 61% of bankers. However, rising rates could chill refinancing activity, with most bankers expecting refinancing to trend flat or down compared with 2005.

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