Is the Fed Expecting Distress in the Commercial Real Estate Market?
New guidance from the Federal Reserve indicates increased attention to the issue of property distress in the commercial real estate market, even as the larger economy shows more positive signs and decreasing inflation. While the office sector is a prominent focus for potential distress, the Fed includes multifamily properties and other CRE property types in its guidance, suggesting that Powell and company are not planning for a rapid decrease in rates and are instead preparing lenders for an interest rate plateau that will bring more property distress the longer it continues.