Interest Rate Hike #8 The Impact on CRE

Ben Kadish, president & founder of Maverick Commercial Mortgage, has observed such effects in real time, with the construction of new developments that have stagnated as a result of value uncertainty. “With interest expense now consuming a larger portion of the construction budget, new projects require more equity from sponsors and will cost more without adding additional value. If there is no return to the equity, those development deals will not move ahead,” Kadish said. Such a slowdown could potentially have serious consequences for new projects. “Until rates start coming down in 2024 or 2025, this part of the economy will grind to a halt and construction workers unfortunately will see less work,” he added.


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