For Now, Don’t Worry About Rising Interest Rates

Barry Saywitz

Interest rates are set to rise. Likely, they will increase nominally a few more times year, and could potential increase next year as well. In commercial real estate, the expectation that interest rates would rise and how the increase would impact the market has become a years-long discussion. Now that it is happening, Barry Saywitz of the Saywitz Co. is saying that the market is so heated, rising interest rates won’t have an impact in Southern California—at least in the short-term. Throughout Southern California, all-cash deals have become common as limited opportunities have driven prices up. Saywitz says that the supply demand imbalance and liquidity in the market will keep prices moving up.

“I believe that the Fed is going to increase interest rates a couple more times here. If interest rates go from 4.5% to 5%, clearly, it is going to cost more. The question is: Is that going to stop the increase of the price of the property,” Saywitz, president of the Saywitz Co., tells GlobeSt.com. “The answer is no, not if rents keep going up and not if you still have a supply and demand issue. I expect that it will have some impact, but not ultimate impact. On the one hand, interest rates have to have some impact on the slowing down the growth of prices. On the other hand, while there are still all-cash buyers and while there are still people looking for fewer and fewer opportunities, there will still be a run-up in pricing. It might be a slower run-up, but you will still have a run-up.”