The Interest Rate Pivot: How the Expected Decline in Mortgage Rates in 2025 Will Impact CRE Investment Transactions
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As interest rates are expected to decline in 2025, commercial real estate investors may finally see a turning point. Easing borrowing costs could unlock new opportunites in deal activity. But navigating this shift will take strategy and agility. In this article, we explore what the rate pivot means for the market, and how Bamboo Equity Partners is preparing for what's next.
Commerical real estate investors have a good reason to watch interest rates closely. Over 80% of industry experts think mortgage rate will drop in 2025, and 75% expect them to keep falling over the next five years. At the same time, GDP growth is slowing, projected to be just 2% through 2026, and 10-year Treasury yields are going down, both signs of a weaker economy that typically leads to lower rates. For investors, this could mean more deals, better financing options, and higher property value. Still, there's some uncertainty. If the economy slows too much, it could reduce some of the benefits lower rates usually bring.
As interest rates begin to come down, real estate investors could see new opportunities take shape. Lower borrowing costs are likely to support a rebound in property values and encourage more activity, especially in sectors like office, industrial, and flex space. Sales activity, which has been about one-third lower than before the pandemic, is expected to pick back up as financing becomes easier to secure. However, the office market may continue to face challenges due to changing tenant needs and work habits, even with improved lending conditions.
While the office market still faces headwinds from changing work habits, Bamboo Equity Partners is meeting the moment with a fresh approach to office space. In 2024, we focused on adding lifestyle-driven amenities to attract tenants, The Crossings at Westport in Maryland Heights, MO is a standout example. Features in the St. Louis Business Journal, the project includes outdoor gathering areas and a new pickleball court, with plans underway to add two restaurants and a drive-thru coffee shop. As Managing Principal Dan Dokovic put it, "It's the new model of the office - you need amenities next to the office, and you need amenities included in the office."
With rates expected to decline, investors have a window to explore targeted opportunities. At Bamboo Equity Partners, we take a creative and flexible approach to every investment. Our team focuses on transforming underutilized properties into high-performing assets, with an eye towards long-term income and strong returns. We prioritize markets with solid leasing demand and properties that can stand out with elevated offerings. By tailoring each investment to attract major capital at exit, we're positioned to deliver results, even in shifting market conditions. As 2025 shapes up to be a more favorable environment, staying agile and aligned with long-term trends is key. Ready to talke strategy? Lets connect.
Commerical real estate investors have a good reason to watch interest rates closely. Over 80% of industry experts think mortgage rate will drop in 2025, and 75% expect them to keep falling over the next five years. At the same time, GDP growth is slowing, projected to be just 2% through 2026, and 10-year Treasury yields are going down, both signs of a weaker economy that typically leads to lower rates. For investors, this could mean more deals, better financing options, and higher property value. Still, there's some uncertainty. If the economy slows too much, it could reduce some of the benefits lower rates usually bring.
As interest rates begin to come down, real estate investors could see new opportunities take shape. Lower borrowing costs are likely to support a rebound in property values and encourage more activity, especially in sectors like office, industrial, and flex space. Sales activity, which has been about one-third lower than before the pandemic, is expected to pick back up as financing becomes easier to secure. However, the office market may continue to face challenges due to changing tenant needs and work habits, even with improved lending conditions.
While the office market still faces headwinds from changing work habits, Bamboo Equity Partners is meeting the moment with a fresh approach to office space. In 2024, we focused on adding lifestyle-driven amenities to attract tenants, The Crossings at Westport in Maryland Heights, MO is a standout example. Features in the St. Louis Business Journal, the project includes outdoor gathering areas and a new pickleball court, with plans underway to add two restaurants and a drive-thru coffee shop. As Managing Principal Dan Dokovic put it, "It's the new model of the office - you need amenities next to the office, and you need amenities included in the office."
With rates expected to decline, investors have a window to explore targeted opportunities. At Bamboo Equity Partners, we take a creative and flexible approach to every investment. Our team focuses on transforming underutilized properties into high-performing assets, with an eye towards long-term income and strong returns. We prioritize markets with solid leasing demand and properties that can stand out with elevated offerings. By tailoring each investment to attract major capital at exit, we're positioned to deliver results, even in shifting market conditions. As 2025 shapes up to be a more favorable environment, staying agile and aligned with long-term trends is key. Ready to talke strategy? Lets connect.
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