A Fed Rate Hike Reverberates Through the Capital Stack for Months

There are multiple direct and indirect impacts you need to plan for over time.

There’s an interesting misconception in CRE, even among those practiced in it, though likely not before the global financial crisis. It’s this: the Federal Reserve raises interest rates and financing for commercial real estate immediately feels the impact.

And that is true, there is an immediate impact. “The effects of Fed rate hikes are felt very quickly in commercial real estate, or any highly leveraged industry, for that matter,” as Kevin Swill, CEO of Thirty Capital Financial, tells GlobeSt.com. “If you think we need to wait six months to see the effects of rate hikes, you’re not following the volume of caps we see very closely. Ask any borrower that needs to refi a loan or buy a springing cap how long it takes for rate hikes to hurt.”

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Erik Sherman

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