A rally in the Treasury market combined with tightening mortgage spreads have driven commercial real estate borrowing costs to the lowest point in more than a year. “After starting the year at 3%, the 10-year Treasury was in the 2.4% range last week, to the surprise and confusion of most,” said Dave Karson, an executive managing director in the equity, debt and structured finance group at Cushman & Wakefield.
The firm is finding that low interest rates and a positive economic outlook are allowing lenders to see more yield. “These factors are also allowing lenders to consider higher-yielding opportunities such as construction loans,” Karson said. “With multifamily and condo construction loans already efficiently priced and leverage creeping up, office construction—including spec office construction—is becoming more....

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