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Interest Rate Drop Impact on Local Market Will Lag, But Will Be Positive

GREATER BOSTON-The drop in the Federal interest rate will have a positive impact on the commercial real estate market here by making it easier to finance projects and by stabilizing the economy, according to local industry experts.

By Naomi Grossman | Updated on January 05, 2001

GREATER BOSTON-The lowering of the Federal interest rate had an immediate positive, impact on the stock market but what about the local commercial real estate market? Industry experts here agree that while it might take a little while to feel the impact, the effect will be a good one.

“It will have more of a lagged effect on real estate,” Ben Breslau, research analyst at Spaulding & Slye Colliers, tells GlobeSt.com. “Real estate decisions take a lot longer. It takes time to negotiate a lease, finance a building or sell a building so it won’t carry over as directly or quickly as the stock market. But if this can help slow or avert an economic recession it will help sustain demand.”

Financing a project will also be easier here with lower interest rates. “Banks have been cautious for well over a year,” Walter Mercer, senior vice president at Spaulding & Slye, tells GlobeSt.com. “They don’t want to have an excess of speculative projects or underwrite projects at the top of market rents but the rate cuts will mean there will be business as usual.”

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