SAN DIEGO—If anyone should understand how the cost money and interest rates affect commercial real estate, it would be Roger Ferguson, who was the vice chairman of the Federal Reserve’s Board of Governors from 1999 to 2006 and the former CEO of TIAA. So when he told the audience at MBA Commercial/Multifamily Finance Convention and Expo here in San Diego that the CRE industry would have to get used to a new normal in interest rates, it took note. 

Ferguson explained that he doesn’t expect the US to return to a place of deflation which drives negative rates. “I think we are going to see a return to the kinds of interest rates where they are around 5%,6%,7%, not the 12% that our parents had to deal with. Flat rates weren’t the norm. Money should not be free and we are getting back to that.”

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