Cap Rate Compression Expected to Halt into 2020 Election

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NEW YORK CITY – Cap rate compression in the current market environment is expected to come to a halt heading into the 2020 election year as investors consider their exposure to domestic and geopolitical risks, Matthew Mousavi, managing principal at SRS National Net Lease Group, tells GlobeSt.com.

The upcoming election and swings within the political climate are expected to have as much, if not more, of an impact on the psyche of the investor than other economic trends or indicators, which could lead investors to pull back on investment, according to Mousavi.

“Uncertainty with the outcome of the upcoming election provides investors with concern about the future of tax policy, regulations and trade,” he said. “This is something we will continue to monitor closely after the second quarter of 2020.”

However, the overall macroeconomy, Gross Domestic Product, consumer spending and confidence and the stock market are performing well notwithstanding issues with global trade, specifically with China. The industry is paying attention closely to not only how the market will play out but its exposure to domestic and geopolitical risk, Mousavi added.

Globest.com recently reported on how trade factors could impact the real estate market, particularly the industrial sector. Trade issues have become an essential factor that industrial investors are weighing in their investment decisions, just as important as cap rates, interest rates and overall economic factors.

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