What Does the Fed’s Interest Rate Cut Mean for Commercial Real Estate?

Posted on September 06, 2019

On July 31, the Federal Reserve Bank announced its first interest rate cut since 2008, leaving investors to wonder if this is the beginning of the end of the decade-long economic expansions that has helped fuel investment in commercial real estate (CRE) and appreciation in property value. According to the Fed chairman, the quarter percentage point reduction represents a precautionary measure to support and sustain already favorable economic conditions, including GDP growth, historically low unemployment and strong consumer confidence.

For commercial real estate investors and property owners, the reduction in the federal funds rate will have minimal impact. On one hand, minor changes in already historically low interest rates will not necessarily impact real estate values. On the other hand, signs of global uncertainty can help to boost international investment in U.S. commercial real estate, giving owners of long-held property a timely opportunity to sell appreciated assets and use the proceeds to reinvest in newer property in booming areas.

With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.