According to National Real Estate Investor, "Interest rates are finally rising, but that doesn’t mean cap rates on apartment properties have to rise too.
“This interest rate increase could be a non-event on cap rates,” says James Costello, senior vice president for New York City-based research firm Real Capital Analytics (RCA).
It’s easy to assume that higher interest rates will naturally lead buyers of apartment properties to demand higher yields on their investments. But investor yields and interest rate often move in different directions.
Interest rates finally rise
It’s too soon to measure any change in cap rates from deals closing now—those deals were negotiated before both the election and the recent rate hike by the Federal Reserve. However an analysis of multifamily deals now in progress by brokerage firm CBRE showed no change in the number of buyers asking to renegotiate prices in late November and early December."
Read more here.