Wouldn’t higher interest rates result in a reduction in asset pricing?
This article written from Globe St is saying that the rising 10 yr synonymously speaking with rising cap rates will increase the asset pricing. This makes no sense to me, shouldn't it lower the price of the asset or property since the cost to borrower increases, meaning liquidity will dry up for new acquisitions?



https://www.globest.com/2022/09/19/commercial-real-estate-remains-a-critical-investment-asset-even-as-cap-rates-rise/?slreturn=20220824150729


I have a Debt Originations Analyst interview and REIT Financing interview this upcoming week and I have no formal CRE experience, so I am just trying to understand. Any tips or resources will be appreciated!
[{"id": "ipr9g08", "text": "You\u2019re correct. It must be a typo.", "replies": [{"id": "iprymri", "text": "Yea it\u2019s kind of confusing to because he says rising cap rates, which equates to lower selling prices. You can\u2019t sell at a 4% cap rate when you can get a bond for close to that. The risk will be priced in.", "replies": [], "depth": 2}], "depth": 1}, {"id": "iprg2rh", "text": "Yeah it's incorrect - by definition rising cap rates equate to lower asset valuations, and increasing interest rates equate to rising cap rates.", "replies": [{"id": "ipryxwx", "text": "Traditionally. Although, multifamily has been such a staple for large and old money firms I don\u2019t see cap rates rising too much. These deals have long horizons in mind and I think there will be more competition entering this asset class as an investment as stocks underperform. But that\u2019s just my intuition for this next cycle.\n\nHistory tells us cap rates will go up steadily. I just can\u2019t imagine a good building selling for more than a 6% cap rate.", "replies": [{"id": "iprzz49", "text": "Industrial and MF caps will still rise, they already have and it will only accelerate. They definitely don't need to correlate to the same degree as less desirable asset classes like office though to your point.", "replies": [{"id": "ips07u3", "text": "Yea I know they will rise, but I think there will be strong resistance at 6-6.5% cap rate. But that\u2019s just my feeling of my market in California too which performs relatively strong.", "replies": [{"id": "ips0r40", "text": "I agree with that sentiment, especially for large assets with institutional interest.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "ipsp08d", "text": "Seeing retrades already, but projected rent growth for multi family and class A/b industrial will keep the cap rates from going up too much.  Can still get decent IRR on those property types because rent growth is still going strong.", "replies": [{"id": "ipsp48m", "text": "Yea and in a stagnant housing market rent demand shouldn\u2019t dip unless things really turn to shit and there\u2019s no work for anyone.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iprh45k", "text": "Prices will continue to fall and rates climb. Somewhere ahead in the next 12-24 months there will be the sweet spot of lower prices and falling rates. Then we will just blow the entire bubble back up again.", "replies": [{"id": "iprl0n2", "text": "This is the way.", "replies": [{"id": "ipro6k3", "text": "Potentially", "replies": [], "depth": 3}], "depth": 2}, {"id": "ipu4bwl", "text": "Don\u2019t stop I\u2019m almost there", "replies": [], "depth": 2}, {"id": "ipuaqn2", "text": "In a vacuum, yes. Some MSAs are still seeing enough rent growth to offset part of the rate increases.", "replies": [], "depth": 2}, {"id": "ipuiybc", "text": "I don\u2019t like the word bubble. Do you know how much much are on the sidelines waiting to be invested? I only say bubble when we were over leveraged like the 2008 crash. The core of this CORRECTION is not over leveraging. Look there will be another new ATH and then another after that, and so on and so forth. But there also might be new ATL as well, we don\u2019t know.", "replies": [], "depth": 2}], "depth": 1}, {"id": "iprua5e", "text": "So this is why every FT article on treasuries/debt has to include a terse sentence after talking about the yield: \"Yields rise when prices fall.\"", "replies": [], "depth": 1}, {"id": "ips0140", "text": "Yes higher cap rates equal lower value. Some don't think interest rates have as much correlation as is commonly thought. Dr. Peter Linneman most notably.", "replies": [], "depth": 1}, {"id": "ips8ycs", "text": "Yes", "replies": [], "depth": 1}, {"id": "ipuvv7s", "text": "The author is confused. An increase in cap rates causes a decrease in asset prices.\n\nNOI of $1,000,000 / Cap Rate 0.045 = $22M Asset\n\nNOI of $1,000,000 / Cap Rate 0.050 = $20M Asset", "replies": [], "depth": 1}]