New York’s Top CRE Owners On Interest Rates in 2025

Talk about taking an interest.

The primary focus of so many commercial real estate owners remains interest rates and what rising or falling rates will do to the cost of borrowing money to finance or refinance properties. 

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For years after the Global Financial Crisis in 2008, rates rested in the very low single digits, if not near zero. That all began to change in 2022 when the Federal Reserve began steadily increasing its benchmark rate to combat inflation. Up steeply went the cost of money, and down went CRE activity on nearly all fronts (except distress!). 

The Fed has cut its benchmark rate twice since September as inflation eased. Will it keep doing so, thereby bringing rates down by mid-year 2025 — to, say, below 4 percent? Commercial Observer asked owners just that for our annual Owners Magazine: Would rates be above or below 4 percent by July 1?  

The most common answer was “above.” 

Sam Charney, founder of Charney Companies: “Above, but a man can dream.”

Jared Epstein, president of Aurora Capital Associates: “Unfortunately, above.”

Rick Gropper, co-founder of Camber Property Group: “Above, sadly.”

Michael Phillips, chairman of Jamestown: “We can dream.” 

While such pessimism represented the majority of responses, there were a few (very few) optimists — “slightly below,” according to Marx Realty CEO Craig Deitelzweig — and there were some jokesters, too. 

“Yes,” Tredway CEO Will Blodgett answered, “they will either be below or above 4 percent.” 

Or Hal Fetner, CEO of Fetner Properties: “If I knew exactly the answer to that, I would probably change my response as to whether I’m buying in 2025.”

Then there were a few who went right past interest rates and instead settled on the 10-year Treasury yield, which can be a crystal ball for predicting mortgage rates. Oliver Carr, Carr Properties’ CEO, went for it: “10-year Treasury will be below 4 percent.” And so did L&L Holding Chairman David Levinson: “The 10-year Treasury will be in the 4 percent range, give or take 10 basis points.”

Anthony Malkin, who chairs Empire State Realty Trust, wasn’t so optimistic about the yield: “10-year Treasury will be higher.”

Ditto Muss Development President Jason Muss: “Above — if referring to 10-year [Treasury] or SOFR [secured overnight financing rate]. Way above if you are asking about ultimate pricing after a spread is applied.”

There you have it: The New York area’s leading commercial real estate owners are pretty bearish for the new year when it comes to almighty borrowing costs. Then, again, who knows? 

“My guess is above, but I really have no idea,” GFP Realty Chairman Jeff Gural confessed.

Gregg Schenker, president of ABS Partners Real Estate, agreed. “I have no way to know.”

Tom Acitelli can be reached at tacitelli@commercialobserver.com.