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What Higher Interest Rates and Inflation Mean for Commercial Real Estate

The era of near zero interest rates appears to be nearing an end. Despite emergent geopolitical risks stemming from Russia’s invasion of Ukraine, mounting inflation now has the Fed’s full attention. During January, the Consumer Price Index (CPI) leaped 7.5% year-over-year, marking the largest annual jump in just under 40 years. Broadening price pressures have arrived against a backdrop of tangled supply chains and robust consumer demand, fueled in large part by accommodative fiscal and monetary policies over the past two years meant to help offset the pandemic recession. More recently, tightening labor markets have fueled rapid growth in wages and incomes, fanning the flames of inflation even further.

The intensity and persistence of inflation have prompted a hawkish pivot from the Federal Reserve. Perhaps the most notable recent change in our macroeconomic outlook is we now expect the Fed to raise the federal funds rate five times in 2022, bringing the current target range of 0.0%-0.25% up to 1.25%-1.50% at the end of this year. We also look for the Fed to begin to gradually shrink its balance sheet later this year. The result of these actions, as well as the expectation for higher inflation and strong economic growth moving forward, will be modestly higher interest rates across the board. While the uncertainty brought on by the crisis in Ukraine has brought longer-term rates lower in recent days, yields on the 2-year, 10-year and 30-year Treasuries are hovering at levels not experienced since before the pandemic.

*Article courtesy of Wells Fargo

For more information about New Jersey or Philadelphia health care space, industrial space, retail space, office space, land or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia cannabis, healthcare space, office space, retail space, land and New Jersey and Philadelphia industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage, and advisory firm, is a premier New Jersey and Philadelphia commercial real estate brokerage firm that provides a full range of New Jersey and Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other New Jersey and Philadelphia commercial properties for buyers, tenants, investors, and sellers.

A New Jersey and Philadelphia commercial real estate broker with expertise in New Jersey and Philadelphia commercial real estate listings, Wolf Commercial Real Estate provides unparalleled expertise in matching companies and individuals seeking new New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, or New Jersey and Philadelphia industrial space with the New Jersey and Philadelphia commercial properties that best meets their needs.

As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.  

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