CRE executives express concern over interest rate hikes

According to Seyfarth Shaw’s annual Real Estate Market Sentiment Survey, commercial real estate executives are mostly concerned about rising interest rates and a potential recession in 2019.

“With the adage that cycles do not die on their own, but result from some event or action, the industry is facing increased interest rates (taking into account 2018 too) as part of the Fed policy and political and stock market volatility, such that an ‘event or action’ appears more likely than not to occur,” said Ron Gart, a partner with Seyfarth Shaw.

The law firm has helped clients close over $50 billion in real estate transactions since 2017. It surveyed CRE executives about a range of topics, from cannabis investments and coworking spaces, to the impact of ride-sharing services.

91% expect at least one interest rate hike, with 44% saying the CRE industry can absorb about 51 to 100 basis points before any noticeable impact.

70% of CRE executives reported no future plans to increase investments into coworking in 2019, despite the sector having massive growth.

“We were surprised with the lack in interest in coworking space in the upcoming year,” said Gart. “Coworking has been one of the top issues in office leasing with major real estate companies now creating national coworking platforms.”