After months of hand-wringing and speculation from all corners of the US economy, the Fed decided, once again, that doing nothing was the best thing to do.
The much-anticipated FOMC rate hike that many would thought would come at the FOMC meeting on September 17, 2015 didn’t happen, which is likely to cause a new and even more intense round of uncertainty that has been adding to market volatility, especially in the equities market.
This time around, the Fed pointed to the bumpy performance in the global economy as a major reason for holding the line on its benchmark Fed Funds Rate.
China is of particular concern, as that country’s slowdown in manufacturing is impacting the pricing of raw materials and oil. Supplier nations have been hit hard as a result, forcing them to borrow more to replace lost revenue. For months, central bankers and leaders from around the world have been pleading with the Fed to hold off on a rate hike until global conditions stabilize. Apparently, those pleas were heard loud and clear.
The good news for industrial real estate is that we can expect interest rates for long-term real estate financing to remain low, at least for the next several months. That could result in another spike in demand from buyers anxious to lock in favorable loans before the Fed finally steps to the plate. Cheap money means lower operating cost for industrial users and that will embolden sellers to keep pushing for higher prices.