The Federal Reserve Makes Aggressive Half-Point Rate Cut, First Since the 2020 Pandemic
As the economy evolves, lower rates offer a promising outlook for commercial real estate
The Federal Reserve has lowered its key interest rate by half a percentage point. Here are insights from our CEO, Chris Jackson, and the head of our NAI Capital Commercial Investment Services Group on key questions:
Economic Strain
How do you anticipate the recent Fed rate cuts will impact commercial real estate investments in the short term?
The economy is beginning to show signs of strain, which may temper initial enthusiasm for lower rates. We don’t expect a significant impact until later this year or early next year, when rate cuts could reach up to 1%.
Market Outlook
Are there specific types of properties or markets that are particularly well-positioned to take advantage of lower interest rates?
Owner-occupied buildings are likely to see faster sales, along with various types of investment properties. We also anticipate that developers will initiate new projects next year as market conditions improve.
Lender Adjustments
How are lenders adjusting their loan terms and underwriting criteria in response to the Fed’s rate cuts?
Lenders have indicated they are offering variable-rate loans in anticipation of further rate cuts over the coming year. Beyond this, we do not expect major changes in their approach.
