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Implications of Rising Inflation for CRE

July 18, 2022 by Marcus & Millichap Research Services

What Investors Should Know About The Latest Inflation Data

Inflation Rose at Highest Pace in 41 Years

  • Driven by energy prices, CPI inflation surged 9.1% in June over last year
  • Declines in fuel and commodities prices may ease inflationary pressure

Aggressive Fed Action Expected

  • Fed likely to raise interest rates by 75-100 bps on July 27
  • Abundant capital continues to target CRE; Mitigates risk of market softening

Implications for CRE

  • Financial market volatility benefits stable investments such as CRE
  • Inflation resistant properties favored
  • Higher yield secondary/tertiary markets increasingly favored
  • Commercial assets with rent escalators and properties with short-leases or value-add opportunities favored

*Through June; 10-Year Treasury through July 14
Sources: Marcus & Millichap Research Services, BLS, Federal Reserve

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Filed Under: Research Brief

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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2020 Marcus & Millichap and Limon Net Lease Group

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