Commercial Observer: 2025 Power Finance
Peachtree Group’s Managing Principal & CEO, Greg Friedman, recognized on Commercial Observer’s Power Finance 50 list.
The Federal Reserve's 50 basis points cut to the Fed funds rate in September has sparked fresh conversations about its impact on commercial real estate (CRE) investments. While there's optimism in some corners about a return to a lower rate environment, the bond market signals a different story, with long-term rates remaining high and inflation risks persisting. This is a good reminder that short-term rates, set by the Fed, and long-term rates, like the 10-yearTreasury, often move independently.
Today's higher rate environment reshapes the value fundamentals of CRE. The current 10-yearTreasury rate of around 4%—double the pre-2022 average—demands that CRE values recalibrate. Reports of a 20% drop in CRE values since 2022 peak levels require context; those valuations were rooted in a vastly different interest rate environment. Today’s scenario implies a slower growth trajectory, requiring investors to adapt to a "new game" of higher rates for longer.
Across CRE assets, different sectors respond to higher rates in distinct ways. Hotels, for example, benefit from solid demand as travel returns, while multifamily assets continue to show resilience despite refinancing pressures. Office assets, however, face significant stress due to both secular and rate-driven challenges.
Even as the Fed cuts rates, refinancing on previously low-rate debt presents ongoing challenges for CRE assets, especially those with upcoming maturity dates. Higher rates elevate the cost of debt and squeeze cash flows while impacting the overall asset valuations, placing additional stress.
Despite headwinds, the current environment offers unique opportunities to strategic, agile investors. While higher rates may drive down asset values, for those prepared to navigate today's market with moderate leverage and a forward-looking strategy, today's challenges can evolve into future tailwinds. As the Fed's recent moves signal a "higher for longer" era, CRE investors who adapt swiftly may find unprecedented opportunities, making this a prime moment for decisive action in commercial real estate.
See Peachtree Group’s CEO and Managing Principal, Greg Friedman discuss this topic on CNBC’s Fast Money.
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GlobeSt. selected Greg Friedman as a 2025 Rainmakers in CRE Debt, Equity & Finance
Congratulations to Peachtree Group's Managing Principal & CEO, Greg Friedman, for being selected as a 2025 Rainmaker in CRED Debt, Equity, & Finance by GlobeSt.
GlobeSt - In a challenging era for CRE finance, these men, women, teams and companies have demonstrated exceptional prowess in navigating choppy waters. They managed to steer through a period of elevated interest rates and successfully grappled with falling property valuations, a trend that has made refinancing particularly tricky for many in the sector. Moreover, they have shown an uncanny knack for operating within capital markets that have become increasingly stringent. Their innovative solutions and steadfast leadership have paved the way for new opportunities in what has been an unpredictable market.