CRE Midwest

Seyfarth Shaw: The biggest concern for CRE execs? Rising interest rates

Seyfarth Shaw: Fear of rising interest rates,ph01

What is the biggest concern facing commercial real estate executives today? According to the latest Real Estate Market Sentiment Survey by Seyfarth Shaw, rising interest rates top the list.

The survey – released earlier this month – found that 98 percent of commercial real estate executives exepct interest rate increases from the Federal Reserve this year. One-third of the executives are predicting three such increases during the next 12 months.

Executives are concerned about the impact of these increases. A total of 63 percent of CRE executives said that the industry can handle increases of 51 to 150 basis points. Beyond that level, though? Executives worry that this could slow down the growth in commercial real estate.

CRE executives, like the rest of the country, have been watching the performance of the Trump administration. Last year, Seyfarth Shaw reported that executives pointed to tax reform as the most important task that the new administration could take on.

Now that that reform has been enacted into law, what do CRE execs think? According to Seyfarth Shaw, 58 percent of respondents this year said that the new Tax Cuts and Jobs Act will extend the positive commercial indutry cycle for at least another one or two years.

Public transportation and ride-sharing services showed up in the survey, too. Seyfarth Shaw found that 43 percent of respondents said that the rise of ride-sharing services will impact their analysis and development of properties. Real estate executives are evaluating their properties based on reduced parking needs and proximity to public transportation, according to the survey.

And what about the rise of bitcoin and crytpocurrency? Do more CRE execs expect to accept cryptocurrency payments in real estate transactions this year? In a word, “no.”

Seyfarth Shaw reported that 96 percent of respondents to its survey have no plans to adopt cryptocurrency into their CRE transactions in 2018. The survey cited three main reasons: the volatility of this type of currency, a lack of understanding of how virtual currency works and a lack of regulations guiding the use of cryptocurrency.