As any real estate professional knows, the CRE sector directly influences and is influenced by the broader economy. Now the Kansas City Fed has come up with an index it believes can help to measure those interactions for a particular region to enable improved forecasting and planning.

An article by Nicholas Sky, vice president of the Federal Reserve Bank of Kansas City, and researcher Bethany Greene, points to the tight link between CRE activity and the financial sector, including banks and the broader financial markets. And it contends that CRE development in a given area often has more to do with the regional economic landscape than with  aggregate conditions. “Community and regional banking organizations tend to have high CRE loan concentrations, further tightening the regional connections to the sector,” the authors write.


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Philippa Maister

 

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