Why US hotel investors should focus on 'grinding it out till 2029'
Featured in CoStar: Peachtree Group CEO Greg Friedman shares his outlook on the hotel investment market and why the industry may be “grinding it out till 2029.”
CoStar - U.S. hotel owners hoping for lowered cost of debt to appear on the horizon will have to wait even longer.
The Federal Open Markets Committee voted unanimously to hold the federal funds rate at 3.5% to 3.75%. In his first remarks as the new Federal Reserve chair, Kevin Warsh said that economic activity is expanding at a solid pace despite the elevated uncertainty due in part to the war with Iran. Productivity growth and capital investment are both strong, and U.S. job gains have kept pace with the workforce while the unemployment rate has changed little.
The Fed’s latest decision reinforces a reality that markets are finally starting to accept, said Greg Friedman, managing principal and CEO of Peachtree Group, via email. Policy rates may stay restrictive for longer than many investors hoped. Lower energy prices can help headline inflation, but the Fed is focused on the broader inflation backdrop, so it’s unlikely to move faster on lowering rates until it sees sustained progress.
“Rather than focusing on the timing of the next rate cut, investors should focus on building portfolios and investment strategies that can perform under current conditions,” Friedman said. “The winners in commercial real estate this cycle will be those who adapt to today's market realities, not those waiting for yesterday's conditions to return.”
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