Top things to look out for in commercial real estate in 2022

<p>Thirty Capital’s rate predictions for 2021 were super close, with rates going up to 1.78 on last week’s release of the December FOMC minutes.</p> <p>The minutes indicate the Fed might hike rates as early as March this year once tapering is finalized. The news pushed the Ten-year Treasury up a massive 27 basis points from its closing of 1.51, currently at 1.78 – the highest level since January of 2020.</p> <p>Thirty Capital Analyst Bryan Kern says: “All of our predictions for 2021 were close - we missed it by about two or three days.”</p> <p>But is 1.80 now the floor, or will we see higher than that? Bryan thinks the floor is in the 1.70 range, with some movement up and down, depending on the news. Generally, he says, commercial real estate investors can expect to see rates heading higher.</p> <h1>Short-term rate predictions for 2022</h1> <p>In this episode Analyst Jay Saunders gives an in-depth explanation of what’s happening with short-term rates and the SOFR curve. Briefly, on the short-term rate front, the curve actually steepened a little bit last year. Jay explains that this will continue in 2022.</p> <p>Of interest, he adds, is that on the forwards on the SOFR curve there is not a reset anywhere going out for 50 years above 2%. Analyst Jason Kelley agrees, saying that he doesn’t see short-term rates going over 2% at any time in the future.</p> <h1>Long-term outlook for inflation</h1> <p>Jay says that he and many others aren’t convinced that the economy is in a long-term inflationary environment. Despite what’s happening now - largely due to the pandemic - the long-term fundamentals aren’t going to change.</p> <p>“I think that some of the inflationary pressures are starting to ease a little bit. I don’t think you’re going to continue to see it accelerate,” comments Jay.</p> <h1>Rate volatility a ‘big deal’</h1> <p>Even so, Thirty Capital CEO Rob Finlay points out that any kind of rate spikes will be tough for investors. For example, a 25-basis point increase on an investor’s borrowing will crush a deal. R