Investors’ Top Question About Interest Rates

Written By Marc Nicholson

Fed’s Cut Transforms the CRE Investment Landscape ​

Fed Cuts Rates by 50 Basis Points ​

  • The 10-year Treasury rose after the cut, but other Treasury rates continued to decline ​

  • Different Treasuries may diverge in the short-term, but tend to move in the same direction over a longer time span ​

  • Wall Street already priced in the Fed’s 50bps cut ​

Wall Street Expects Significant Cuts Moving Forward ​

  • Investors eyeing for a recession, but most economic indicators remain positive ​

  • Federal Funds rate projected to drop to 3% by late 2025 ​

  • Barring a recession, declining rates should provide tailwinds for CRE investment activity. ​

CRE Market Has Shifted Gears ​

  • Rate cut expectations spurring aggressive bidding activity in several sectors and regions ​

  • Many institutions are beginning to reengage with CRE ​

  • Cap rates may begin to compress, but this depends on strong investor demand and ready access to debt capital ​

​As of September 24​
Fed funds rate forecasts based on midpoint of highest probability target range ​
Sources: Marcus & Millichap Research Services, Federal Reserve, CME Group​

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Marc Nicholson
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