Commercial Real Estate Leaders React To The Fed's Decision To Hold Rates

Members of the Federal Reserve opted to keep rates steady at their first meeting of 2026 and for the first time in four votes. 

The widely expected decision Wednesday once again came with dissenting votes that have become part and parcel of Federal Open Market Committee meetings during the past year, reflecting the mix of opinions about how exactly the economy is performing and where it’s headed.  

The FOMC gathered at a time when President Donald Trump is leveraging tariffs to rebalance global trade in unpredictable ways and as members of the central bank are facing what some — including Fed Chairman Jerome Powell — see as unprecedented political pressure in the form of federal investigations and attempted firings.

The mix of economic and political developments are wide open for interpretation, and the Bisnow team once again rounded up some of the more interesting takes that landed in our inbox.

Responses have been edited for length and clarity.

Garret Weyand, partner at Cedar Street Partners: Holding rates flat keeps the market in the same box we’ve been in — financing is still expensive, lenders stay conservative, and a lot of viable deals continue to sit on the sidelines. CRE debt costs don’t really come down until we see spreads ease and lenders get more comfortable putting new money out. The upside is stability — at least we know the rules of the game — but flat rates alone isn’t the catalyst that suddenly brings volume back.

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Mike Fratantoni, chief economist at the Mortgage Bankers Association: While not a unanimous vote, there does seem to be a clear and consistent majority in favor of a pause in this rate-cutting cycle, a pause that likely continues unless or until the job market weakens further. With inflation remaining elevated, the FOMC majority does not seem in any rush to make further rate moves.

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Omar Eltorai, senior director of research at Altus Group: The Fed is expected to continue with its rate cuts through 2026 we believe, but we believe they are unlikely to cut before spring. Despite the growing pressure on the Fed and increasingly loud calls to cut sooner, the central bank remains data dependent. And the most recent data continues to show little reason for immediate additional cuts. Inflation is elevated, real GDP is strong, and labor markets remain intact. 

While rate cuts would certainly be welcomed by and benefit the CRE market, the more important portion of rates to watch now is the Treasury market, where there have been meaningful moves even in the absence of Fed Funds rate changes.

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Allan Swaringen, CEO of JLL Income Property Trust and managing director at LaSalle Investment Management: Today's decision to hold rates steady was widely anticipated by the market and may prove to set the tone for 2026’s rate environment. While a lower base rate is always welcome, the cumulative impact of late 2025's cuts has already jumpstarted the real estate cycle. We're now observing robust transaction momentum both on the investing and the lending side and, with a more stable rate environment, we anticipate consistent steady market improvement throughout 2026.

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Pete O'Neil, national director of research at Northmarq: A short-term pause in rate cuts likely will not have much impact on the industry. Most market participants anticipate further cuts beginning in the second or third quarter. Between now and then, I expect more attention will be paid to the yield on the 10-year Treasury than to any action — or inaction — by the Fed. 

While a few months of inactivity should have only a modest effect on CRE overall, multifamily and industrial have been the most active sectors by transaction volume and are likely to be most sensitive to rate movements. Single-tenant net-leased retail properties are also highly sensitive to changes in interest rates.

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JP Conklin, CEO of Pensford: The labor market has cooled dramatically over the last three years, and the Fed has reacted in kind by reducing Fed Funds by 1.75%. With inflation stubbornly above the Fed’s stated 2% target, members are transitioning into a more cautious stance.

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Alissa Sieben, president of Souza Development: Holding rates steady won't cause a big swing in most CRE borrowing costs right away. Floating-rate loans, common in bridge, construction and multifamily financing, are tied to the secured overnight financing rate and would stay flat without Fed movement. Fixed-rate and perm loans, on the other hand, are tied to Treasury yields, which have remained elevated due to deficits, inflation risks, and global factors. 

Banks are still using extend-and-pretend strategies, especially on multifamily, to give breathing room and prevent widespread distress. Resilient sectors like data centers, industrial, purpose-built medical offices, and master-planned communities keep drawing capital, so the overall effect is stability rather than new challenges.

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Paul Rahimian, CEO of Parkview Financial: As expected, with all the external noise and no clear data, the Fed has kept the Fed Funds rate at the same rate as before. However, we believe that in the later half of 2026, with a new Fed chair and further weakening of the labor market, the Fed could reduce rates between 2-4 cuts. We understand that the market is projecting only 1-2 cuts, however we believe the data and a new Fed composition will dictate lower rates.

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Dwight Dunton, CEO of Bonaventure: While the labor market has softened at the margins, the broader economy remains resilient, and inflation has not yet convincingly returned to long-term targets. In that environment, there is no urgent catalyst forcing immediate action. There is also a strong incentive for the Fed to reinforce its independence, particularly in a politically charged year. Absent a clear deterioration in economic conditions, staying on hold allows them to maintain credibility while preserving optionality for later in the year.

Certain areas, such as data centers, continue to see robust development regardless of modest rate movements, as secular demand overwhelms financing sensitivity. By contrast, multifamily is far more rate-sensitive at the margin. Development economics are tight, and even small changes in financing costs can determine whether projects move forward or stall.  

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Uma Moriarity, senior investment strategist at CenterSquare: Today’s decision to hold the Federal Funds rate is in line with market expectations but the Fed doesn’t determine the long-end of the yield curve, which is the more important consideration for commercial real estate and remains range-bound. However, that stability on the long-end of the yield curve should help the CRE transaction market continue its recovery.

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Marion Jones, executive managing director of U.S. capital markets at Avison Young: The Fed’s decision to hold rates steady came as no surprise to real estate investors, who remain focused on market fundamentals and long‑term growth drivers as much as the interest‑rate environment. While investors generally view today’s rate levels as more manageable than in recent quarters, further easing would certainly be welcomed.