How FED Rate Hike Impacts the Commercial real estate outlook

Takeaways From September Fed Meeting

•The Fed reiterated its commitment to preserving stable prices and moving inflation back to 2.0%

• They raised interest rates 75 basis points, projected another 125-basis point rise before the end of 2022

• Indicated a 4.4% unemployment rate may be needed to balance the labor market and control inflation

Why Rising Rates Matter For Investors

• Rising capital costs are squeezing levered yields; buyer underwriting becoming increasingly conservative

• As market recalibrates sellers must review market pricing to align with buyer expectations

How This Impacts Commercial Real Estate Transactions

• Expectation gap emerging between buyers and sellers

• Recalibration of the transaction market is needed for buyers and sellers to reach market clearing sales prices