00:00 Speaker A
The CRE market was waiting for lower rates. Of course, now the Fed is hiking. What broadly does that mean for for the CRE market? What are the ripple effects? Does that does that push their recovery out?
00:11 Speaker B
It does push the recovery in sales out a bit. We were on a really good trend line this year of additional sales as the market was coming off the 2023 bottom. Uh, however, the most recent surge in interest rates does pose a challenge especially for deals that were already underway or fresh listings that were on the market that had been priced and now being presented to buyers.
00:46 Speaker B
You know, a quarter basis point or you know, 50 basis point movement in interest rates makes a big difference in the valuation of commercial real estate. So there’s a lot of re-evaluation going on, but the buyer demand is very strong. uh and it’s not as tied or sensitive to interest rates as we’ve seen it in the past, mainly because prices have adjusted and there’s so much pent up demand for sellers to bring property to market
01:23 Speaker B
where they’ve been waiting for three years now for a recovery in the market and valuation uh improvement that really hasn’t come to fruition, mainly because there was no Fed miracle. A lot of our clients were waiting to see if interest rates would go back down and uh they have not. Uh therefore, it is now time to bring product to market. Maturing loans, north of 800 billion this year are going to be a catalyst for even more sales coming in later this year and into next year.
02:04 Speaker A
Let’s say you’re an investor, you’re listening right now, you have capital available. Are there pockets of the CRE market some like certain specific verticals where you say that that looks like a particularly compelling potential smart opportunity?
02:22 Speaker B
It’s interesting. Some of our clients uh are using an all cash strategy to acquire assets because interest rates are high for now. Most properties are 20 to 30% uh at lower cost than they were at the peak of the marketplace. That varies by property type. Office properties have seen the biggest price correction of course. Multifamily somewhere around 20%.
02:59 Speaker B
The um multi-family rental market is really benefiting from the lack of housing affordability where more people who would be home buyers are staying renters longer. That’s starting to show up in the numbers. So multi-family really stands out, small retail really stands out uh where the higher interest rates, you know, are not really uh deterring fresh capital and entrepreneurial buyers for coming into those particular property types.
