DENVER (Nov. 15, 2023) — Jeff DeHarty, senior vice president in Northmarq’s Denver office, recently authored an article in the Colorado Real Estate Journal, titled “Capital constraints within a tightened monetary policy.”
As the commercial real estate sector adjusts to the steepest Federal Reserve rate increases in the last 35 years, DeHarty shared his thoughts on the current state of the capital markets and opportunities ahead.
Despite higher interest rates and lower transaction volumes, lenders remain active and DeHarty noted loan originations for life insurance companies, agencies and banks all increased in the second quarter of 2023 compared to the first quarter. DeHarty expects life insurance companies to continue gaining market share on commercial real estate loan origination due to healthy balance sheets – which also differentiates sponsors with ample liquidity.
“As the real estate cycle resets, so do return expectations,” DeHarty said. “Market participants understand nothing is linear. Exogenous factors impact our industry, but for many the cycle reset is what they have been waiting for and is long overdue.”
Topics covered in the article include:
- Immediate effects of monetary policy tightening.
- Federal Reserve’s Bank Term Funding Program (BTFP).
- Who’s well-positioned to benefit from this uncertain environment.