The Federal Reserve and interest rates are the key forces driving the commercial real estate sector at the moment as the market waits for what appears to be an impending rate reduction.
"I hope they get on with it so we can put this chapter behind us and move on to other significant trends affecting commercial real estate," John Chang, SVP of research services at Marcus & Millichap's, said in a research video.
But the Fed has a delicate balancing act to perform when deciding how to adjust rates, he noted. It has to keep inflation under control but also keep people employed – essentially maintaining the economy in the 'Goldilocks Zone,' meaning don't let it get too cold or overheated. Chang said the Fed may be fearful of making the wrong decision, which could result in waiting too long and ultimately oversteering interest rates.
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