CRE owners are likely to focus on net income preservation instead of interest rates in the coming year, according to CoStar Group's January real estate update.

While high interest rates and speculation about whether/when the Fed will lower them have dominated the capital markets for months, CoStar expects they will not play as significant a role in the months ahead.

This view flies somewhat in the face of the ongoing demands from CRE investors for interest rates to be lowered to encourage deal-making and development. It comes even as markets speculate that the Fed appears set to start cutting rates in March. Right now, the market is pricing in six 25-basis-point rate cuts next year to a range of 3.75% to 4%, or a reduction of about 150 basis points from its current range of 5.25% to 5.5%, according to CoStar. The Federal Open Markets Committee expects a cut in the mid-to-upper 4% range by year end.