Intelligent Investment
Pause or Play: The impact of the Fed's latest rate decision
September 18, 2025 42 Minute Watch
CBRE experts provided a timely, data-driven analysis following the Federal Reserve’s 25 basis point cut in the fed funds rate. The discussion explored how the Fed’s move impacted debt and equity markets and identified emerging opportunities for commercial real estate investors navigating today’s shifting economic landscape.
The Impact of the Fed's Latest Rate Decision
Key Takeaways
Fed Rate Cut Catalyzes Renewed Momentum for CRE Investment
The Fed’s 25 basis point rate cut—expected to be followed by additional cuts this year—marks a turning point for commercial real estate (CRE). Lower short-term rates are expected to unlock sidelined core capital, narrow bid-ask spreads, and accelerate transaction volume.
Investor Sentiment Drives Competitive Bidding
Beyond the math of rate cuts, investor sentiment is playing a critical role. As uncertainty clears, investment committees gain confidence, leading to faster decision-making and more aggressive underwriting. This shift is already influencing deal velocity and pricing, spurring more competitive bidding processes.
Most Sector Fundamentals Remain Strong, but Volatility Matters
Retail, industrial, multifamily, and office are showing resilience, with positive absorption in most sectors supporting valuations. However, long-term rate volatility—not just elevated rates—has been a key challenge. Stabilization is expected to improve underwriting confidence and encourage capital deployment.
Lower Borrowing Costs Will Drive Cap Rate Compression
The easing interest rate cycle is improving the cost of leverage, particularly for investors using floating rate construction, bridge or transitional financing. As borrowing becomes more accretive, investors can expect cap rate compression, especially in multifamily and industrial, where financing dynamics are tightly linked to asset pricing.
Featured Capital Markets Speakers
Kelli Carhart
President, Multifamily, Capital Markets
Thomas Lee
Group President and Co-Head, US & Canada, Capital Markets, Advisory Services
James Millon
Group President and Co-Head, US & Canada, Capital Markets, Advisory Services
Will Pike
President, Industrial & Logistics, Capital Markets
Related Insight
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As expected, the Federal Reserve lowered the federal funds rate by 25 basis points (bps) today to a range of 4.00% to 4.25%.
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