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This week on In the CRE Vault with Mike and Marc, the team at NAI FMA Realty dives into one of the biggest topics in commercial real estate today: cap rates versus interest rates.

With interest rates rising while cap rates remain compressed, many deals simply aren’t penciling the way they used to. Buyers want yield, banks want a wider spread, and sellers are still adjusting to changing market realities. In today’s environment, there often needs to be a 2–3 point spread between cap rates and borrowing costs for deals to make financial sense.

Mike and Marc discuss why 1031 exchanges have become more difficult, why buyers are hesitating, and how “decision paralysis” has become a real factor across the market. A Class A+ office building trading at a 7% cap rate may have disappeared overnight five years ago — today, it’s sitting. Even multifamily properties around a 5.75% cap are seeing slower activity.

The market has changed, expectations need to evolve, and creativity matters more than ever. Fortunately, Mike and Marc still find a way to have some fun while talking through the chaos.

Thanks for tuning in to In the CRE Vault with Mike and Marc—where we break down commercial real estate without putting you to sleep. Powered by NAI FMA Realty in Lincoln, Nebraska. For more, visit naifmarealty.com.