Fed Hikes Rates, Commercial Real Estate Transactions Continue Unfazed

The Federal Reserve raised interest rates for the first time in more than three years on Wednesday, hiking its benchmark rate by a quarter point to between 3.75 percent and 4 percent.

This decision was made despite some concerns that higher borrowing costs could slow down commercial real estate transactions in the latter half of 2026.

However, experts like Joseph Fingerman, president of CRE at Peapack Private Bank & Trust, warned that elevated interest rates have slowed transaction activity and are widening the gap between buyers and sellers.

Fingerman noted that higher debt service costs are reducing loan proceeds on deals, requiring borrowers to contribute more equity. This could lead to a divide between well-capitalized sponsors who can afford to contribute fresh equity and overleveraged owners facing maturity challenges.