For the duration of the financial crisis and the long recovery that has followed, detractors of the Federal Reserve's ongoing experimentalism have warned against stoking runaway inflation. It is a credible concern but not one that has proven out. While it stands to reason that low costs of capital have played their role in lifting asset prices, fears of broader inflation at the hands of central bankers have thus far been misplaced. As labor markets tighten in the United States, above-target inflation may rear its head; in the here and now, deflation is the more immediate threat.

In the United States and elsewhere, inflation is running below monetary policymakers' assumed target of 2 percent. In the extreme, declining prices on the Continent have shaken the European Central Bank out of its relative disengagement and onto a belated course of quantitative easing. Across the leading European economies, only Norway and Austria can boast inflation above 1 percent. Back at home, where growth is stronger and labor markets are tightening, December's consumer price index was just 0.7 percent higher than a year earlier.

The sharp decline in oil prices explains a great deal about the direction of prices, but it is not the whole story. Even after removing volatile energy and food components, narrower measures of core inflation indicate underlying weakness in demand across a broad range of product and service categories. There is an output gap.

As a commercial real estate investor, should you be concerned about deflation? Yes. While lower prices may seem like a gift to consumers in the short run, stagnant wages and cash hoarding are part and parcel of declining prices. There is also the matter of your debt, which is now growing in real terms. The institutional owner holding a core asset may not be troubled; the marginal private buyer is in a more precarious position if deflation persists for an extended period. Most problematic and least appreciated among the deflation risks, basic monetary policy tools – and investors' confidence in the power of central banks – are undermined as we approach the next inflexion in the business cycle.