“On the other hand, rising interest rates have to be looked at in terms of the bigger picture, if they're rising for the right reasons, meaning the economy is growing,” he adds. Economic growth is, of course, a net positive for CRE.

From an investor standpoint, “If you want to step on the gas in terms of growth, you want to invest in real estate asset classes where you can reset rents more frequently,” Dickerman advises. “That would include multifamily, where rents are reset every year, and we're not hotel investors, but you could argue that with hotels you can reset rents every night. That compares to a warehouse where you have a long-term lease for 10 years. That's less likely to benefit from a rising price environment.”

Dickerman doesn't see the recent spike in the 10-year continuing longer term. “Right now, the 10-year is anticipating some of the moves that are going to happen in '17,” he says. “I don't think the 10-year will continue to run. There could be some marginal increases, but it's already ahead of itself, and there are those who are thinking that it takes time to implement some of the policies Trump is talking about. Even though we may see a flurry of legislative activity, it's going to take months and months.”

NEW YORK CITY—“The Trump election really bought the Fed a lot of cover,” says Ronald Dickerman, founder and president of Madison International Realty. He notes that prior to the Federal Reserve's decision Wednesday to implement its second increase in the federal funds rate since 2008—a year after implementing the first such increase—yields on the 10-year Treasury had increased around 100 basis points post-election. “Most commercial real estate loans are keyed more to the 10-year than the federal funds rate,” he says.

“Before the election, the Fed was walking a tightrope, because they were trying to decide whether they could raise rates or keep them the same, and everyone knows this lower-for-longer environment has gone on much longer than people expected,” Dickerman tells GlobeSt.com. “Now the game has changed, and I don't think the fact that the Fed raised the rate another 25 bps was the big story.”

The big story, he says, was that “the Fed is now looking for three additional rate increases in 2017, of roughly 25 bps each. That represents much more conviction over raising rates than otherwise would have existed. The Trump election has pressed a reset button because of the expectation for lower taxes, rollback of regulation, enhanced government spending around defense and infrastructure; it's very likely that the economic growth forecasts for next year and beyond will move upward. A quickly growing economy buys the Fed cover in terms of looking to raise rates.”

After nearly a decade of historically low rates, commercial real estate will now be in a rising rate environment. That fact, says Dickerman, will “definitely going to change people's mentality in terms of transacting, locking in lower rates. It's going to change rates of return; you're going to have to see some reduction in purchase price to accomplish the same equity rate of return.

“On the other hand, rising interest rates have to be looked at in terms of the bigger picture, if they're rising for the right reasons, meaning the economy is growing,” he adds. Economic growth is, of course, a net positive for CRE.

From an investor standpoint, “If you want to step on the gas in terms of growth, you want to invest in real estate asset classes where you can reset rents more frequently,” Dickerman advises. “That would include multifamily, where rents are reset every year, and we're not hotel investors, but you could argue that with hotels you can reset rents every night. That compares to a warehouse where you have a long-term lease for 10 years. That's less likely to benefit from a rising price environment.”

Dickerman doesn't see the recent spike in the 10-year continuing longer term. “Right now, the 10-year is anticipating some of the moves that are going to happen in '17,” he says. “I don't think the 10-year will continue to run. There could be some marginal increases, but it's already ahead of itself, and there are those who are thinking that it takes time to implement some of the policies Trump is talking about. Even though we may see a flurry of legislative activity, it's going to take months and months.”