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On Wednesday, the Federal Reserve cut interest rates by 25 basis points, the first cut since 2024. While it took a while to get here, commercial real estate has been undaunted by the wait — transaction volume was up 15% year-over-year in the first half of 2025.
“The Fed’s 25 basis point cut reinforces what the market had already started anticipating, and in many ways, pricing and activity had already begun to reflect it,” Dan Berman, U.S. real estate managing partner at law firm Herbert Smith Freehills Kramer, told Bisnow in an email.
So now that the cuts are finally here, what does this mean for the rest of the year? How should CRE professionals react?
Jim Costello, executive director at MSCI Research, said on Bisnow’s First Draft Live that it’s important to remember that interest rates aren’t everything and a 25 bps drop doesn’t solve much.
“If you want to be successful in CRE, it’s not about that home run of capital market forces lifting the value tremendously,” he said. “It’s going to be a lot of singles and doubles.”
Those singles and doubles come in the form of proper leasing — getting the right broker in place who will get tenants into a property, doing a proper risk analysis of tenants to make sure they can actually pay, making sure the capital expenditures spend and operating expenses are in line with market averages, Costello said.
“That’s going to be the recipe for success,” he said.
Watch here to see the rest of the conversation:
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