The Federal Reserve cutinterest rates twice in two weeks in response to the impacts of theCOVID-19 outbreak. First, the Fed cut rates to 1% to 1.25% on March3, and then, in an emergency meeting, made a second cut to 0% to.25% on March 15. Many in the commercial real estate industry saythe move was a necessary response to the economic impacts of thevirus outbreak, but that they will have little impact on newacquisition commercial real estate deals.

"It was necessary to show that the Fed is active, interested andinvolved," Patrick Ward, founder and president ofMetro Group Realty Finance, tells GlobeSt.com."However, commercial real estate debt is really based on thelong-term Treasury, and that actually went up 25 basis points overthe last couple of days. We watch the 10-Year Treasury, so when theFed lowers the discount rate to near zero, it is good for theglobal picture, but commercial real estate financing is sometimescounter to that."

There are currently a lot of question marks about the length ofthis outbreak, the severity and the sheltering period. Lenders areresponding with caution, as is typical during times of uncertainty."We have seen dramatic cycles like this, and when this happens,lenders do one of two things," says Ward. They either sit backbecause they don't know where things are headed, or they put inartificial floors to protect themselves. They don't know where theindexes are going and they don't know where the spreads are going.That is what we are seeing now."