Insights From the NMHC Conference

WHY INVESTORS EXPECT CRE TRANSACTIONS TO REVIVE IN 2024​

The Federal Reserve Kept Rates Flat​

• The Fed kept the overnight rate in the 5.25% – 5.5% range, but they left door open to cuts later this year; Rate cuts would signal reduced inflation and increasing economic stability​

• Multiple rate cuts in 2024 could cause lenders to reduce their lending spreads, in turn reducing the cost of CRE debt capital​

Lenders Could Begin to Loosen Standards and Increase LTV’s​

• As lender confidence in the downward trajectory of interest rates gains momentum, they may begin to loosen their standards​

• Lenders have tightened their standards for 6 straight quarters​

• Loosening lending standards could facilitate increased investor leverage​

Investors Plan to Get Active Sooner, Rather Than Later​

• Lower interest rates would help unlock the near record level of dry powder waiting to transact in commercial real estate​

• Many large private investors may try to move forward before the institutional capital fully engages​

*Through 4Q 2023​
Sources: Marcus & Millichap Research Services, Senior Loan Officer Opinion Survey​

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