Inflation is up. Interest rates are still low. How long? Who knows?

While consensus says 2022 will shape up to be another generally good one for commercial real estate, developing financial realities are a potential detour. And this type of uncertainty is the hobgoblin of CRE plans.

"We tend to fight the last battle," Harold Bordwin, principal and managing director of Keen-Summit Capital Partners, says. "We understand it from hindsight and the crystal ball doesn't always tell you what's happening."

Unfortunately, it's always the new battle that faces the industry.

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TRACKING INFLATION

The last time inflation was hitting close to its current rates was during the run-up to the 2008 financial collapse—nearly 15 years during which many people came into the industry and never learned how to work with significant inflation, let alone significantly high interest rates from the 1970s and 1980s. That makes having a sense of the near future important.

Trying to follow where inflation will go is difficult. The Federal Reserve has never been able to finely control inflation. Over the last decade or so, the rate often ran lower than the 2% the Fed wanted. Currently, while the institution says that higher inflation is temporary, it has acknowledged that the period may run longer than originally expected. Oxford Economics projects that "sticky supply-driven inflation will continue well into 2022" and core CPI to again hit 4.7% and the raw national headline inflation figure, including volatile food and energy prices, to be 5.3% in the first quarter of 2022.

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