What the Fed Hike and GDP Decline Mean for CRE Investors

GDP Contracts for Second Quarter in a Row

• GDP growth negative in 2Q; Not necessarily a recession
• Labor market, consumption and manufacturing performed well in 1H 2022
• Each markets will experience varying headwinds

Fed Implements Another Aggressive Rate Hike

• Fed raised overnight rates 75 bps on July 27
• Aggressive action a response to high inflation
• Puts overnight rate in 2.25%-2.50% range, on par with July 2019

Considerations for CRE Investors

• Fundamentals remain strong for most properties
• Core economic drivers in place to support property space demand
• Investors recalibrating strategies to adapt to more fluid investment climate

*Through 2Q
Sources: Marcus & Millichap Research Services, BEA

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