Neal Bawa says cap rates are already decompressing in commercial real estate, but public datasets like CoStar haven't caught up yet because they're tracking deals signed before the Fed's three consecutive 0.75% rate hikes. Active brokers selling multiple assets each quarter are seeing the shift firsthand.
Cap rates have already decompressed. If you talk with the people that are on the front lines, the brokers, right? The brokers that are selling 10 assets a quarter, every single one of them will tell you cap rates have decompressed, but it's not showing up in the data. It's not in the CoStar data, it's not in the RD Matrix data. The reason for that is it takes time. Also, keep in mind how ridiculously quick this has happened, right? The Fed started raising rates in March, but that was just a quarter point. Who cares, right? But then the 0.75 hammers, 3 successive 0.75 hammers have just happened in the last 4 months. Well, how much property can you actually sell in the last 4 months? Almost, almost, almost everything that is in the cap rate data that we are looking at today was in, was in contract before the 3 big 0.75 hammers. I would argue that the cap rate data that you are able to see today does not contain any impact from the three big hammers.
