A Few of Our Hopes Following the Interest Rate Reduction

On September 18th, the Federal Reserve announced a 50 basis point reduction to the federal funds rate, bringing to an end a years-long period of sustained higher interest rates. This change should help many aspects of our economy but, in many scenarios, will not bring immediate relief to the commercial real estate industry. Here are our top three hopes for how it will help:

1. Sellers who have resisted lowering their price expectations become more realistic with buyers who need lower pricing to rationalize the cost of debt.
2. Lenders start adopting an offensive outlook after months of defensive strategy following the failure of banks like Silicon Valley Bank and First Republic Bank.
3. More CRE owners will be able to achieve a successful refinancing of their assets, allowing owners to take back control from special servicers and re-start leasing.