WilmingtonBiz Magazine

Letter From The Editor: Of Notable Interest

By Vicky Janowski, posted Apr 4, 2024
Vicky Janowski
As this year’s real estate issue goes to press, a lot of eyes are watching Fed Reserve officials closely.

On March 20, U.S. stock indexes hit record highs after the Federal Reserve did nothing that day. Earlier in the day, the Fed held interest rates unchanged, again keeping the target range of 5.25% to 5.5%.

Maintaining comes after raising rates 11 times between March 2022 and July 2023 to combat inflation. 

Though the decision to do nothing was expected, the markets were buoyed by the central bank’s outlook for three rate cuts still this year despite recent data that shows that inflation has eased but remains high.

Investors, banks and college students who recently applied for a credit card to pay for spring break have a particular interest in the Federal Reserve’s interest. But so do commercial real estate developers.

Business Journal commercial real estate reporter Emma Dill talked to developers behind some of the projects that have been put on hold the past couple of years because of the pressures of rising costs and securing funding that stemmed from higher interest rates for the story “Pause & Reflect.”

“I would say probably one in 10 deals got done last year,” McKay Siegel, partner with East West Partners, told Dill about the rate’s impact on timing. “That’s probably trending to be true for this year … with the exception that maybe people are a little more optimistic about the back half of the year.”

Read more about the status of those paused projects here.

Other commercial projects are moving ahead in the area – particularly with multifamily, retail and office space.

Apartment projects continue to be announced and site work is visible in the Mayfaire area for the major mixed-use project Center Point. And bucking the national landscape, office vacancy rates are low in the Wilmington market, with new office buildings under construction. Read more about that and other area commercial real estate trends here.

As investors read the tea leaves on interest rate decisions, mortgage bankers also are keeping their eyes on the horizon, particularly with refinancing. An estimated $1.2 trillion of U.S. commercial real estate debt is set to mature in the next two years, according to the Mortgage Bankers Association, with a quarter of that coming from loans in office and retail.

There’s a lot to watch ahead for the commercial real estate sector, and a bird’s eye view couldn’t hurt.
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