The rebound in U.S. commercial property prices is outpacing that of commercial rents, painting an unrealistically optimistic picture of the market, Michael Fascitelli, CEO of Vornado Realty Trust, told a crowd at Manhattan’s De La Salle Academy yesterday. “I think we’ve bottomed, and we’re going in an upward trend,” Fascitelli said, but added that “the pricing is indicating a much more robust recovery in three to five years than I think we might have.” According to Reuters, Fascitelli cautioned that an inevitable rise in interest rates might soon stall that upward pricing trend, leaving landlords dependent on still-sagging rental income to maintain their property values. “I worry about rates spiking up without inflation in assets,” Fascitelli said. “You have to make the money by income going up. The risk is that you do OK on the front rentals for a while, but interest rate rises take all the juice away.” [Reuters]
Fascitelli: U.S. commercial real estate rebound not as robust as it seems
