Commercial real estate has had an almost uninterrupted run of increasing values since bottoming in the wake of the global financial crisis in 2010. Acquisition yields have persisted at historical lows for several quarters, and many question how long the asset class can remain priced to perfection.

As we head into 2017, a potentially bigger impediment has emerged: rising interest rates. The 10-year Treasury rate increased more than 65 basis points between the election and Christmas as investors reacted to the prospect for more robust domestic output during a Trump administration, the potential for reduced oil output and more aggressive monetary policy by the Federal Reserve.

Since the 10-year government bond is the benchmark used in the commercial real estate market for pricing debt and equity, it stands to reason that the cost of owning properties will rise, and that will lead to an increase in acquisition yields (otherwise known as cap rates). That, in turn, cou