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Industrial cap rates hold steady despite higher interest rates
- Northern and Central New Jersey’s industrial cap rates compressed 210 basis points over the last three years due to increasing investor demand.
- Market cap rate compression and recent increases in the federal funds rates have given some investors pause, as they question whether the new interest rate environment will affect industrial cap rates.
- Spreads between Class A cap rates and AAA Corporate bond yields have averaged 2.12 percent since 2015—stronger than the 1.33 percent reported during the two years, leading up to the last recession—indicating that recent increases in borrowing costs may not immediately impact industrial cap rates.
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