With the Federal Reserve bumping up its key interest rate by the most in nearly three decades, many commercial properties on the market are approaching negative leverage territory. Negative leverage happens when the mortgage rate rises above the cap rate. As a result, the cash-on-cash return drops below the cap rate (Globe St). In the case of industrial real estate, the 6% average cap rate is sitting dangerously near the average industrial mortgage rate, which recently jumped over 5%. Given that the allure of commercial real estate investing is positive leverage, investors will increasingly put pressure on market cap rates to rise. While the overall market may be peaking, new high-yielding opportunities are emerging in industrial real estate.

I N D U S T R I A L   N E W S

Welcome To Negative Leverage In CRE
Globe St. – June 14, 2022
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‘Rapid Repricing’: Higher Interest Rates Slow CRE Deals,
But Many Investors Won’t Be Deterred
Bisnow – June 13, 2022
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Federal Reserve Raises Interest Rates By 0.75%, Most Since 1994,
Amid Effort To Slow Inflation
Yahoo! Finance – June 15, 2022
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One Gauge Sees 0% GDP Growth In Second Quarter
The Balance – June 15, 2022
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Amazon’s Plan To Sublease Industrial Space May Just Be The Start
WealthManagement.com – June 9, 2022
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R E G I O N A L   N E W S

Chicago Metals Company To Build First Permanent Facility In
Houston Amid Port Boom
Bisnow – June 7, 2022
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Titan Development And The City Of Hutto Announce Land Purchase
Of ‘Hutto Mega TechCenter,’ A New Industrial Park In Hutto, TX
PR Newswire – June 8, 2022
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Starpoint Properties To Break Ground On Class A
Industrial Park In Central Denver
Mile High CRE – June 13, 2022
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Industrial In Chicago Still Demolishing Records
RE Journals – June 7, 2022
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Stream Realty To Phase-In 3.4 Million Square Foot
Mesquite Industrial Development
Connect CRE – June 15, 2022
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