Another month, another 75-basis point increase in the Federal Reserve’s benchmark interest rate. And as the overnight inter-bank lending goes—with a target range of 2.25% to 2.5%—so go many other interest rates, including what commercial real estate firms will be paying for access to financing.

“The Fed announcement of hiking their target Fed funds rate by 75 basis points was highly expected,” Kevin Fagan, head of CRE economic analysis at Moody’s Analytics, tells “This was likely baked in by most commercial real estate market participants, particularly lenders where we’ve seen loan interest rates rise north of 50 basis points in 2022, mostly in the second quarter. That puts pressure on asset values and squeezes lender profits and borrower returns. Therefore, [we expect] both debt issuance and commercial real estate sales volume to pull back in Q2, as the industry assesses the near-term future.”

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