Lenders' Insatiable Appetite for Commercial Real Estate
Will the Fed's Rate Decision Bolster the Economy? | by Matt Hudgins | Following the Federal Open Market Committee's announcement that the target Fed Funds rate will remain at historically low levels through mid-2013, Matt Hudgins warns "commercial real estate investors to be prepared in case capital costs rise despite the Fed’s efforts." Sam Chandan offers that "low short- and long-term interest rates relieve some of the upward pressure on cap rates and mortgage financing costs.” Still, the Fed's move is not a panacea. “We still need to see underlying fundamentals strengthen, principally in the form of absorption-driving job growth,” added Dr Chandan. “A major risk of current monetary policy is that myopic buyers and lenders will not account for the likelihood of higher baseline rates in valuing their exit or refinancing terms.”
Read the full story at the National Real Estate Investor Magazine website.