Economic Overview:

•  The Fed voted to lower the fed funds rate by 50 basis points (bips) to a target of 4.75% to 5%.
• A 50-bps cut was in line with market expectations, which underscores that the Fed executed this milestone first cut without measurably surprising markets or expectations in the near-term. This is according to Cushman and Wakefield.
• Both the magnitude of the cut, along with the tone of Powell’s press conference, signal that the Fed is willing to take decisive yet measured action in balancing both sides of its mandate.
• Updated projections from the FOMC suggest that the Fed will cut rates by another roughly 50 bps through year-end (bringing target rates to the low-to-mid 4% range by year end 2024) while also cutting roughly 100 bps through 2025 (bringing target policy rates to the low-to-mid 3% range by the end of 2025). This also according to Cushman Capital markets team. 

Commercial Real Estate Market Overview:

• Borrowing costs for commercial real estate has come down materially in Q3 as this trend begins to pick up momentum. The hope is that capital markets continue to stay ahead of any deterioration of jobs or fundamentals.
• The 5 and 10-year treasury markets have already priced most of this move over the last few weeks and months. Spreads have come in materially already this year and seem to be stable. CBRE is reporting that they have locked several deals near or below 5% as of late.
• Also per CBRE, the following CRE trends are likely to continue and or play out:

• • • Commercial real estate investment activity has began to pick up in the second half of 2024.
    • Retail real estate fundamentals are still strong due to the scarcity of new construction deliveries over the past decade.