How FED Rate Hike Impacts the Commercial real estate outlook
Takeaways From September Fed Meeting
- The Fed reiterated its commitment to preserving stable prices and moving inflation back to 2.0%
- They raised interest rates 75 basis points, projected another 125-basis point rise before the end of 2022
- Indicated a 4.4% unemployment rate may be needed to balance the labor market and control inflation
Why Rising Rates Matter For Investors
- Rising capital costs are squeezing levered yields; buyer underwriting becoming increasingly conservative
- As market recalibrates sellers must review market pricing to align with buyer expectations
How This Impacts Commercial Real Estate Transactions
- Expectation gap emerging between buyers and sellers
- Recalibration of the transaction market is needed for buyers and sellers to reach market clearing sales prices
*Through September 22
Includes apartment, retail, office, and industrial sales $1 million and greater
Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics, Federal Reserve
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