Capital remains available, but its cost and accessibility continue to shape investment decisions across commercial real estate. Meanwhile, consumer trends and property fundamentals are producing very different signals across sectors. With that in mind, here are 10 numbers and trends that have caught our attention:
- The 10-year Treasury yield rose 85 bps in Q3 to 5.29%, then fell to 4.95% by November 3. The pullback provides some financing relief, but it may not signal a durable decline in borrowing costs.
- Futures markets assigned a 79.2% probability of a 25-bps rate increase at the December 9 FOMC meeting as of November 4, following the Fed’s decision to leave rates unchanged at its October meeting. The still-elevated odds of a hike present a potential headwind for floating-rate borrowers facing loan maturities and rate-cap renewals.
- REITs issued $14.9 billion of debt in Q3, up from $14 billion a year earlier, but borrowing slowed each month as rates climbed. Monthly issuance fell from $7.4 billion in July to $2.9 billion in September, while the weighted-average coupon rose from 5% to 6.1%, a sign that higher borrowing costs are tempering debt-market activity even as REITs retain access to capital.
- Announced listed-REIT acquisitions reached $100.9 billion across 14 deals through Q3, versus $5.7 billion across one deal during the same period a year earlier. Public-to-public combinations accounted for about 75% of this year’s value, including the merger of multifamily REITs Equity Residential and AvalonBay to form Vivmark Residential.
- UDR and Apollo completed a joint venture involving 19 multifamily communities valued at approximately $2 billion, implying a 6% cap rate. The partnership provides UDR with equity capital for debt reduction and higher-growth investments, illustrating how joint ventures can recycle capital and create transaction supply without a full asset sale.
- Inflation-adjusted retail and food services sales rose 2.5% year over year in September, but monthly growth slowed to 0.1% from 0.9% in August. Inflation, including higher gasoline prices, accounted for much of the nominal sales gain, suggesting August’s stronger spending momentum may not carry into the holiday season.
- More than $2.2 billion of conduit and single-asset, single-borrower CMBS transactions priced during the week ended October 30, following a two-week pause in issuance. The return of activity as the 10-year Treasury moved below 5% suggests modest rate relief was enough to bring borrowers and lenders back to market.
- International travel trends diverged in September: inbound non-U.S.-citizen arrivals increased 0.2% year over year, while U.S.-citizen departures declined 2.5%. The gap points to steadier inbound demand, an important support for gateway-market hotels, retail, and other tourism-oriented real estate.
- Prologis reported 23.4% cash rent growth on leases commencing in Q3 and 5.9% cash same-store NOI growth. The large leasing spread reflects the mark-to-market embedded in older leases and supports continued cash-flow growth even as current market rent gains moderate.
- Seniors housing occupancy reached 90.4% across the 31 NIC MAP primary markets in Q3, up 1.7 percentage points from a year earlier. Inventory grew just 0.4% year over year. Limited new supply supports further occupancy gains, although labor costs will influence how much of that strength translates into NOI growth.
Colliers Insight
Rachael Rothman
REIT borrowing fell by more than half from July to September as coupons climbed to 6.1%.
