4min chapter

We Study Billionaires - The Investor’s Podcast Network cover image

TIP537: The Surprising Opportunities in Commercial Real Estate w/ Ian Formigle

We Study Billionaires - The Investor’s Podcast Network

CHAPTER

Cap Rates and Interest Rates in the Commercial Real Estate Industry

In the commercial real estate industry, this is a returns-driven industry. Any time that you have increases in demand or decreases in demand, those are going to generally move cap rates. In 2022, we saw rent growth cool at the same time that interest rates shifted upward rapidly. And so as buyers were successfully hit with higher borrowing costs and couldn't find a justification for returns elsewhere, their return expectations were hit.

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