The headquarters of the Federal Reserve Bank of Boston. Photo Courtesy of Fox-orian / CC BY-SA 3.0

The latest edition of the Federal Reserve’s Beige Book, a compendium of anecdotes about the state of the nation’s regional economies, is out, and the Federal Reserve Bank of Boston’s section of the document states cap rates on industrial properties are being driven dramatically downward by investor interest.

“Several contacts reported multiple interested buyers on any for-sale industrial building, with one noting that this has pushed cap rates ‘shockingly low’ (under 4 percent) in some cases,” the document states.

In the office market, the Boston Fed reported, lease renewals were “almost the only activity.” In many cases, the report states, many tenants were willing to pay slightly if lease terms were shortened. The overall lack of activity in the sector, however, meant that downward pressure on rents thanks to vastly increased inventories of sublease space has yet to materialize.

Overall, the bank reported, its contacts in the commercial real estate industry expected the first two quarters of 2021 to continue to be “bumpy” in line with the fourth quarter of 2020. Many said they expected to delay major decisions until after the widespread administration of vaccines.