CRE Owners Catch a Break


This past week, commercial real estate owners caught a huge break.  The 10YR treasury yields fell almost 0.30% throughout the week, and are 0.80% lower than their high of ~5.00% in mid October. Not even Friday’s comments by Fed Chair Powell that “rate cuts are premature” stopped yields from falling.  Short term yields (1MO - ~5.40%) are still well above longer term yields with the five year treasury yield being under 4.15% and the ten year treasury hovering around 4.20%.

This pullback in treasuries over the past 30 days has created a window of opportunity for real estate owners to refi existing floating rate loans or fund new acquisitions.  While we’ve all enjoyed 15 years of historically low interest rates, courtesy of the Fed’s efforts to revive the US economy during the Great Recession, markets work in cycles and we are still learning if we are back in the Pre-Great Recession cycle. 

Those of us who’ve been in the industry 20 years or more remember that the current 10 year treasury yields are right in line with, if not lower than, where 10-year treasury yields had been for the ten year period prior to the Great Recession that began in 2007.


The question we have to ask ourselves is whether we think rates are more likely to slide back down to ultra-low levels, or whether rates are more likely to trend upwards toward their historic norms?  Now may be the time to take advantage of this dip in treasuries for your commercial real estate financings.  

Key Economic Indicators:  November 27th to December 1st 2023

Indicator Reported Period Actual Projected Prior
New Home Sales 11/27 Oct 679,000 725,000 719,000
PCE Index Change 11/30 Oct 0.2% - 0.4%
Core PCE Index Change 11/30 Oct 0.2% 0.2% 0.3%
Construction Spend 12/1 Oct 0.6% 0.3% 0.4%