The Best Ever CRE Show JF 3909: Interest Rates, Cap Rate Trends, and CRE Buy Timing
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May 18, 2025 The discussion dives into the rising risks of higher interest rates and their effects on commercial real estate. There's an exploration of the shifting FedWatch predictions and growing inflation concerns amid political uncertainties. John evaluates cap rate trends, compelling investors to consider acting now for better leverage. He highlights lucrative sectors poised for growth, including multifamily housing, well-located retail, infill industrial, and medical offices, encouraging timely investment in a volatile market.
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Markets Adjust to Fed Rate Reality
- Financial markets are adjusting to the reality that the Fed will not be lowering interest rates soon.
- The probability of rate cuts by upcoming dates has significantly decreased according to FedWatch data.
High Tariffs Sustain Inflation Risk
- Despite tariffs being reduced, the effective tariff rate remains historically high at 17.8%.
- This ongoing tariff level continues to contribute to inflation worries for the Fed.
Political Uncertainty Raises Interest Rate Risk
- Consumer sentiment hit near-record lows mostly due to inflation fears.
- Political uncertainty and stalled federal budget increase risk of higher borrowing costs.