Lower interest rates are not a magic bullet, but less restrictive monetary policy lays the groundwork for a commercial real estate recovery, wrote senior economist Charlie Dougherty.
Decreased long-term interest rates appear to be easing upward pressure on cap rates and slowing declines in property valuations. Meanwhile, increased expectations for an economic soft-landing look to be giving capital the green-light to move off the sidelines.
That said, reduced interest rates should prevent distress from spreading and shorten the hurdles coming down the road, Dougherty said.
Companies, who had been extending mortgage deals through the higher-rate environment, will see some relief and eventually be able to refinance at lower rates, said Douglas Gimple.
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