Akerman Real Estate Financing Practice Co-Chair Naheem J. Harris spoke with Law360 in the article "How The Fed's Rate Hike May Affect Real Estate," offering a pragmatic read on how the Federal Reserve's first interest rate increase since 2023 will affect financing, transaction activity, and key sectors of the commercial real estate market.
"There is still significant capital looking to be deployed, and we continue to see lenders and borrowers find creative ways to transact, utilizing loan extensions, preferred equity, mezzanine capital and other financing structures," Naheem said. "I don't think that means that we're pencils down on closing transactions."
"If the Fed is signaling that meaningful rate relief is not right around the corner, I think we may see more market participants stop waiting for yesterday's rates to return and start figuring out how to transact in the rate environment we actually have," he said.
Naheem also spoke to the uneven impact across sectors, noting that multifamily borrowers in markets still absorbing new supply may face additional pressure where rent growth has not kept pace with rising debt service and refinancing costs. "Even data centers, which have been the belle of the ball of late in commercial real estate, may be impacted by the rate increase, given how capital intensive the sector is," he said.