"Extend and Pretend"—Just as Hamlet famously questioned, "To be or not to be," we are also on the brink of a crucial revelation. Are we facing a seismic shift with sustained higher interest rates, a largely overlooked issue? How will this shift affect commercial real estate and other asset classes in both the short and long term? Are the public and private sectors ready for what appears to be the inevitable? Today, we face more questions than answers, and indecision is no longer viable in a higher interest rate environment.
Unlike in the past few downturns, such as COVID, the Global Financial Crisis and the dotcom bust, the Fed significantly reduced interest rates, enabling owners of commercial real estate and lenders to easily engage in "Extend and Pretend," even when cash flows were negative or razor-thin, thanks to the exceptionally low interest costs.
Today, we are in a commercial real estate recession showing no signs of abating. The economy boasts considerable strength, driven by a strong job market, and record liquidity is on the sidelines. I do not see the necessary catalysts to revert interest rates to levels seen in previous cycles. Therefore, I don't see “Extend and Pretend” to be an effective strategy and would prepare for more bankruptcies, foreclosures and forced sales as reality sets in that we are in a new rate paradigm or maybe just a return to normalcy that, unfortunately, will be destructive to values, especially to the lower cap rate assets. Ultimately, amidst any market disruption, there will be pivotal opportunities for those with the decisiveness and the liquidity to seize them at the right moment.
This commentary originally appeared on Greg Friedman's LinkedIn page on May 1, 2024, in response to a Wall Street Journal article titled: Even If the Fed Cuts, the Days of ultralow Rates are Over.
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Institutional Real Estate – In an era where stubborn inflation keeps central bankers awake at night and rate volatility tests investor discipline, smart capital is quietly gravitating to assets that can flex, literally overnight. Hotels, with their daily lease resets, are one of the few real estate plays with a built-in inflation defense. But not all hotels are created equal. For investors looking to put capital to work today, premium-branded select-service and compact full-service hotels stand out as some of the most reliable performers across economic cycles, including inflationary periods.
Short Leases, Big Advantage
Unlike offices or retail, where lease terms can lock in rates for years, hotels are designed to be nimble. Operators adjust room rates daily, matching market demand and passing through cost increases with far less lag than other real estate types. During the inflationary surges of the 1970s and early 1980s, room rates in the United States climbed almost in lockstep with the Consumer Price Index. More recently, ADRs rose rapidly during the inflation spike of 2021–2023, especially in well-positioned premium brands. Yet flexibility alone is not enough. Demand elasticity still matters. Not every guest will pay more just because costs are higher. This is where premium select-service and compact full-service assets show their edge.
Why This Segment Holds Up
Hotels at the upper end of the select-service spectrum, including Marriott’s Courtyard and AC Hotels, Hilton’s Hampton Inn and Hilton Garden Inn, and IHG’s Hotel Indigo and Crowne Plaza, strike the balance travelers want: elevated comfort and amenities without full-service prices. They cater to travelers who want quality and consistency without paying for frills they do not use. Business travelers, sports teams and mid-tier corporate groups typically make up the core customer base. This gives owners both repeatability and rate integrity. Compact full-service properties, especially those under strong flags in good urban or suburban nodes, also shine here. They deliver enough amenities, such as an on-site restaurant, meeting space and a bar, to justify a healthy rate premium while keeping operating costs leaner than those of sprawling resorts or luxury assets.
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ATLANTA (Oct. 15, 2025) – Peachtree Group (“Peachtree”), a leading commercial real estate investment firm overseeing a diversified portfolio of more than $8 billion, today announced the appointment of Lindsay Monge as executive vice president of asset management. In this role, Monge will oversee the firm’s hospitality and real estate assets, driving performance, strategic planning and value creation across the portfolio.
Monge brings more than two decades of leadership experience in hospitality, real estate investment and operations to Peachtree. Most recently, he served as president of Seaview Investors where he led asset management and daily operations for a portfolio of eight Marriott and Hilton-branded upscale hotels in California. Before this, he spent nearly 16 years at Sunstone Hotel Investors, rising to senior vice president, chief administrative officer, secretary and treasurer, where he oversaw corporate functions and played a pivotal role in managing a $3.9 billion asset base.
“Lindsay’s extensive background leading hotel operations and real estate investment platforms makes him an invaluable addition to our leadership team,” said Greg Friedman, managing principal and CEO of Peachtree. “His experience across public REITs, private equity and owner-operator platforms uniquely positions him to enhance value creation for our investors while strengthening our asset management capabilities.”
His career also includes senior leadership roles at Magna Flow as chief operating officer and at Alpha Wave Investors as chief administrative officer and partner where he directed strategic planning, growth initiatives and asset repositioning strategies. Earlier in his career, Monge held management positions at The Westgate Hotel and began his hospitality career in Hilton’s executive management program at the Waldorf Astoria in New York.
Monge earned an MBA in strategy and leadership from the Drucker School of Management at Claremont Graduate University. He holds a bachelor’s degree in hotel administration from Cornell University’s Nolan School of Hotel Administration. He also completed executive education in the LEAD Business Program at Stanford Graduate School of Business.
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Fortune | There’s no doubt that commercial real estate, and especially the office market, is undergoing a seismic transformation, one that’s not likely to abate any time soon. A boom time of near-zero-interest-rate policy, abundant liquidity, and cap rate compression over the past decade has given way to a perfect storm–a wall of maturing debt, tightened lending conditions, and cratering property values–all amid higher interest rates that show no sign of returning to their pre-2022 lows.
The outlook for the office sector has been particularly negative. It’s a tale of two markets right now: roughly 30% of office buildings account for 90% of the vacancies and may never recover, while the other 70% have the chance to stabilize over time. Either way, the office market finds itself at an inflection point, much like the retail market as mall acquisitions were being financed.
