The Evolving Environment of CRE Interest Rates

 May 18, 2022

By  Guy Gray

Interest rates are volatile right now. This is plain to see and it is affecting all industries. Commercial real estate is no exception and CRE pros know that the industry is prone to changes. But the rate of evolution for CRE interest rates has increased in recent years. 

Let’s take a look at why these CRE industry rate changes are happening and how they impact your portfolio.

How CRE Interest Rates Are Calculated

First, let’s cover some interest rate basics. In commercial real estate, these interest rates are affected by several factors, such as:

  • Inflation: Interest rates tend to go up with inflation rates.
  • Supply and demand: increased demand, increased interest rates.
  • Government actions: In addition to the Federal Funds Rate, government actions and policies can have a direct impact on interest rates.

As you can see, interest rates are more “impacted” by outside factors than “calculated.” But they change for a reason and you can track these reasons to better predict future changes.

What’s Causing CRE Interest Rate Changes?

Recently, CRE interest rates have been more volatile than ever. The pandemic and related reasons would appear to be the biggest culprits, but the truth is that the entire commercial real estate industry has changed. Supply will be an issue for at least the near future and demand should stay the same or increase. With drastic recent increases in inflation, an increased demand for different types of commercial real estate and the waves of governmental policies enacted, it should be no surprise that interest rates have changed so much.

Staying on Top of Changes with CRE Software

When it comes to staying updated with CRE interest rates (and preparing for future changes), investing in technology is a must. There’s no better way to stay updated about market changes, industry rate fluctuations and portfolio forecasting. When you’re more aware of changes happening now and in the future, you can gain an edge over your competition and make smarter investments. Quarem delivers all of these features and more, like access to a team of industry professionals who can advise on how to best use the software to stay on top of changes like CRE interest rates.

If you’re interested in seeing how CRE software like Quarem can help you keep up with the evolving environment of interest rates, request a demo today.

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About the author 

Guy Gray

Guy Gray serves as Chief Operating Officer overseeing our technology and client services teams. He is responsible for guiding Quarem application development, networking and security, as well as new client implementations.

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