November 2024

Lower Interest Rates: Good for Landlords & Tenants Alike

The real estate market is buzzing with speculation that interest rates could soon drop, especially if Trump gains influence over economic policy. Recent market movements, like a rise in CRE Brokerage and Real Estate Investment Trust stock prices, show that equity investors are hopeful about rate cuts in the near term.

Lower interest rates could provide multiple benefits for real estate. First, cheaper debt reduces the financial burden on property owners, making it easier to hold onto assets and stabilizing property values. Lower financing costs also encourage new projects, which can add value across the sector.

However, the positive effects go well beyond the supply side of the CRE market. Lower interest rates increase liquidity in the market and means more money swashing around to boost hiring and job growth as companies, young and old alike, find it easier to borrow and expand. This growth in hiring also impacts office space demand, as more companies seek places to set up or expand their operations.

Increased tenant demand helps alleviate the principal challenge of high vacancy in some office submarkets and especially with those office buildings that have struggled. Lower interest rates could also encourage tenants to sign longer leases, which would stabilize income for property owners and make assets more attractive to investors.

In short, if interest rates go down, real estate could see rising property values, more leasing activity, and a return to growth. For landlords and investors, this could mean a much-needed turnaround for the sector with tenants who are bullish and optimistic about the future.

Until next month,

Ben

Ben Blumenthal
Principal Broker | Noah & Co.

Following the momentum of NYC's Q3 leasing activity, just under 4 million square feet of space was leased in October alone (60% in Midtown), a pace that if continued through the end of the year, would lead to the strongest year of office leasing volume since 2018.

So where's the latest action?

< 10k SF

- Edward Jones has a new 10 year lease at 825 Third Ave.
- LKEM & Spada each took a full-floor at 145 West 30th Street
- Savanna inked 2 deals under 3,100 SF each at 106 West 56th
- Davidson Kappel renewed its 22nd floor space at 589 Eighth

10k+ SF

- Veriton Group expands to 72k SF with 10-year extension at 245 Park
- Logistics firm Flexport relocating to 14k SF at 31 Penn Plaza
- Berkeley Research is growing to 50k+ SF at 810 Seventh
- Merchant Bank ZPG relocating from AoA to 430 Park

55+ million SF of NYC office leases set to expire within 3 years

Proposal unveiled to expand sidewalk on prime 5th Ave. cooridor

Congestion Pricing: What you need to know about the new plan

The Vessel reopens to public with additional safety modifications

New rezoning plan would bring 10k homes to Midtown South

Redesigned 2.5 acre park in Hell's Kitchen opens to the public