WRAL Features Insights From Mike Thornton on Impact of Rising Interest Rates on Commercial Real Estate Market

WRAL featured Smith Anderson commercial real estate attorney Mike Thornton in the article “Higher-for-longer interest rate horizon complicates office space market,” which explores how interests rates that have reached a two-decade high are impacting the commercial real estate market.

The Federal Reserve's recent interest rate hikes, driven by post-COVID price inflation concerns, are affecting developers, lenders and tenants in the office space market. Mike emphasizes the direct effect of interest rates on the bottom line of buildings and discusses how a strong job market historically contributes to inflation, influencing the Fed's interest rate decisions.

"Interest rates hit directly at the bottom-line of a building," Mike said, and developers and lenders are the first to feel it. "Any time that number moves up developers will see less income flow. Lenders aren't going to take any more risk than Fed bankers say they should."

WRAL also explores how soft conditions in the office space market are prompting tenants to reassess their needs and consider changes, such as moving from Class B to Class A properties. Mike notes the evolving preferences of tech companies and law firms in office space design and highlights the importance of mentorship and interaction in the workplace.

Mike co-leads the Real Estate Development group and Commercial Real Estate practice at Smith Anderson and has extensive experience representing owners and developers of retail, office, multifamily and hotel properties on a variety of real estate matters, including finance, leasing and joint ventures.  

Read the full article here.