Higher interest rates are a problem, but not the only one facing CRE professionals. Moody's Investor Service has noted that insurance costs were up 73% between 2017 and 2022. Combined with other increases, like taxes and utilities, the challenge of keeping a reasonable NOI can be formidable.

Everything counts, so anything you can do to control and mitigate each part is important. Moody's Analytics offered some ideas earlier in January for insurance. It's actually a three-part approach.

First is to have "early and nuanced negotiations." Owners and lenders understand the statistical (stochastic catastrophe, or cat) models insurers use to calculate their premiums. "This allows for a more nuanced discussion on the expected loss for a particular asset under different extremes, alongside the cost of different amounts of insurance coverage and the consideration of opting for a higher deductible or lower coverage limit to reduce the premium," they wrote. For example, the buyer and lender might agree on coverage for modeled loss cost instead of full replacement cost for a highly unlikely event. Using cat models isn't new, but given the rise of premiums, it's become more important.