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© Getty Images / Art Wager / E+
While Americans await the Federal Reserve’s next decision on its short-term funds rate, the longterm interest rates, including the key 10-year Treasury borrowing rate and most rates on commercial real estate loans, appear to have already topped out. The reason: Consumer price inflation has largely calmed, recording only a 3% rise in June. Further deceleration of inflation is assured as housing rent growth also calms down from the still-hot 8% rise to a much softer level, given the 40-year high in apartment construction.
Meanwhile, warehouse construction was up 4% to account for online shopping growth, which is still outpacing retail in-store shopping following the pandemic. Online sales rose by 7%, while retail sales chugged along at 4% growth, after excluding falling sales at gas stations.
Four million more Americans are now working compared to pre-pandemic March 2020, leading to positive spending activity. Even with the increase in work-from-home and office vacancy rates, the dollar value of office completions rose by 6%, as decisions to start construction no doubt took place before the pandemic. Due to excess inventory, office property prices have been falling, presenting a big challenge but also an immense opportunity for agents and brokers.
