CRE Has Seen Credit Tighten. Will It Spread to the Other Businesses?

CRE depends on businesses and consumers' finances. If they have a problem, so do landlords.

Everyone in CRE knows that a credit crush has been developing. The Federal Reserve’s ongoing increases of the benchmark federal funds rate has pushed up short-term rates, affecting construction and bridge loans. Refinance costs have been on the rise while banks tighten their terms. Quantitative tightening has also had a dampening effect on MBS, CMBS, and CMO markets.

The question is whether the Fed’s efforts to reduce inflation might have started a credit crunch on its way to the rest of the economy, as part of the debate over whether there would be a soft landing or some degree of crash. And whether that would have a negative impact on the businesses and consumers who pay the rents that provides the revenue to the CRE industry.

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Erik Sherman

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