ALTUS SURVEY ON THE EFFECT OF RISING INTEREST RATES

Altus conducted a major survey in November 2022 of clients and partners across the country. Among other things, we asked them about their strategy for dealing with rising interest rates. Three trends emerged:

30% of respondents are considering increasing unit prices for their projects; 49% of respondents are thinking of reducing the number of projects planned; 73% of respondents are planning to put projects on hold.

Most respondents (64%) also indicated that they had revised their expectations for the overall discount rate (ADR) and internal rate of return (IRR). For example, they believed that AGRs would increase for office and retail assets in both major urban markets and secondary markets due to rising interest rates. Less change was expected for industrial and multifamily residential assets, particularly in large urban markets.