While some commercial real-estate owners are cheering as interest rates finally start to fall, others say relief is coming too late for many highly indebted property investors in the largest markets, The Wall Street Journal reports.
Many owners of apartment buildings, hotels and other real estate took advantage of low rates a few years ago and loaded up on debt when borrowing was cheaper. After rates soared starting in early 2022, owners missed payments hoping their creditors would extend deadlines.
Now, the Federal Reserve has come to the rescue by cutting short-term rates by a half-percentage point last week. The Fed is widely expected to follow with more cuts through the end of the year.
The rate cut is welcome news to a commercial property market that has struggled with sinking valuations, stalled sales and difficulties refinancing. More than $2.2 trillion in commercial property debt is coming due between this year and 2027, according to data firm Trepp.
