For more than a decade, the commercial real estate industry has enjoyed a zero or near zero Federal Funds Rate, and with it, a historically low cost of debt. That unprecedented run has officially come to an end, as the Federal Reserve increased its Fed Funds Rate four times in response to inflation. Fed Chair Jerome Powell has signaled more increases to come later this year.
The Fed’s action caused the commercial real estate industry to pause and assess the new market conditions. According to Cliff Carnes, EVP at Matthews Real Estate Investment Services, that pause lasted a mere six weeks.
In this interview, Carnes explains why investment appetite has completely returned, what’s driving the price stabilization in spite of higher rates, and how the near-term outlook is even more promising, with predictions of strong real estate returns and an upward trend in pricing.
Press play to hear all of Carnes’ insights on investment activity, interest rates and inflation, as well as advice for investors pursuing acquisitions in this market.