Question of the Month: The Bid-Ask Gap

by Jeff Shaw

Are you seeing a narrowing of the bid-ask gap or indications that the investment market is thawing?

Stabilization is coming

By John Sweeny

Co-Head, National Senior Housing


We are seeing the early stages of a narrowing of the bid-ask spread as the consensus view is forecasting higher benchmark rates for longer (there’s no pending Fed cut in the short term), as owners think through decisions surrounding debt maturities or expiring caps, fund maturities or their time value of money calculus. 

We expect pricing for the balance of the year to remain challenging, but transaction volume will pick up out of necessity heading into next year. Capital flows into commercial real estate will recover as the interest rate hiking cycle stabilizes and asset repricing becomes more transparent.

The wait will continue

By Dan Lahey

Chief Investment Officer


Stating the obvious, the transaction markets remain very challenging, and any hopes for high levels of transaction volume to resume in the back half of 2023 have gone by the wayside. Some are optimistic that 2024 will see more action, but I believe it may take longer than that. Many sellers may end up in the “Stay alive until ‘25” camp if they have the ability to be that patient.

The bid-ask gap may be narrowing, but the availability of debt on reasonable terms is the largest obstacle I see to the markets reopening in a meaningful way. There is a great deal of quality product that is ready to trade once sellers feel they can get an appropriate price.

Debt markets are a challenge

By Brian Sunday

Managing Director, Seniors Portfolio Director


There are two distinct categories of sellers in the market today: those who have a desire to sell and those who need to sell. The bid-ask gap in the latter category is narrowing as sellers’ capital structures increasingly constrain their time and options. 

With that said, a significant challenge persists in the form of the debt markets, which is causing complications for buyers reliant on debt. As we observe an increasing number of sellers (who may be the lenders) falling into the “need to sell” category, the dynamics of pricing and transaction execution will inevitably depend on the capital available to the buyer — both equity and debt financing.

The future looks strong

By Jay Jordan

Co-Head, National Senior Housing Investment Sales

Grandbridge Real Estate Capital

Yes, we’re seeing a thawing and a narrowing of the bid-ask gap. 

Heading into the fourth quarter, we expect new transactions to be quieter, but anticipate a lot of prep work in that time to gear up for early 2024.

We’re bullish on the coming months and year ahead. Much of our transaction activity in 2022 and 2023 was heavily tilted to value-add and distressed types of sales. Looking ahead, it’s more balanced. We continue to see distressed sales, but improved operating fundamentals will start to thaw more stabilized transactions in 2024.

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