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.

In 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 President Donald Trump’s administration, the potential for reduced oil output, and a more-aggressive monetary policy of the Federal Reserve.

Because the 10-year government bond is the benchmark used in the commercial real estate market for pricing debt and equity, it stands to reason the cost of owning properties will rise, and this will lead to an increase in acquisition yields, or cap rates. That, in turn, could reduce the va