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Interest Rate Hike Impact on CRE

The Federal Reserve finally raised its benchmark interest rate today, in a move the finance world has anticipated since the beginning of the year. The Fed raised its target for the Fed Funds rate from 0.25-to-0.50 percent to 0.50-to-0.75 percent.

More interest rate hikes are likely. By the end of 2017, Fed fund rates are expected to hit 1.4 percent, Fed Chair Janet Yellen said in a press conference. That number should reach 2.9 percent by 2019.

While this year’s rate increase will undoubtedly affect borrowing costs, commercial real estate players saw the hike coming, and finance markets had already adjusted to the change, according to the Commercial Observer.

“The 10-year Treasury has run from 1.5 percent to 2.5 percent just in the last three weeks,” Ronald Dickerman, the president and founder of Madison International Realty, told the Commercial Observer. “The fact of the matter is that if you’ve been quoting rates off the spread of treasuries, you’ve already been incurring the impact of the rate increase.”


Inside The Story

Read More at Commercial ObserverConnect with Madison International Realty's Dickerman

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