The Fed lowered the interest rate financial institutions charge each other on overnight loans to 4.5% from 5% and lowered by a half-percentage point to 4% the discount rates financial institutions pay when they borrow from a federal reserve bank.

"It's very good news," says Bill Shanahan, executive director at Cushman & Wakefield Inc. Financial Services. "From a general perspective, it puts more money in the economy. They are loosening up the money supply, which is what people look at."

The vote taken by the Federal Open Market Committee during a telephone conference call caught most investors by surprise. According to Fed officials, the FOMC--the Fed's top policymaking group--was prompted to cut the rates due to reports of softening capital investment, an erosion in current and projected profits and rising uncertainty about the economy.

"I think people see this as improving the health of the economy, which means lenders will start loosening up on their underwriting," says Shanahan. "Lenders have been conservative in the past few months. This will reduce the cost of borrowing, or loans in general."

The change could have a big impact on employment-driven commercial real estate, which in recent months has felt the pinch as companies have laid off workers, causing higher office vacancy rates in some regions. "More money in the economy makes it cheaper to do business. If you can do more business cheaply, you may not be laying off people," explains Shanahan. "Conversely, when you lose bodies, you don't need space."

Wednesday's decision marks the fourth time the Fed has cut its federal funds target by a half-point over a three-and-a-half-month period, one of the most aggressive periods in the Fed's history. Even so, FOMC hinted they may cut rates again.

"The committee continues to believe that against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future," the FOMC said in a statement.

Shanahan thinks the Fed's move was a solid proactive measure. He says he has sensed from speaking with others that there's been a feeling over the past couple months that the economy has been improving. "Even so, there was a sense the economy was still a little bit in the woods--no one is saying the 'R' word and, but people sensed there was some concern out there," he says.