Hospitality Investing News - Southwest November 2024

Outlook positive for investors. The reduction to the overnight lending rate and less upward pressure on the 10-Year Treasury — which fell to the 3.6 percent band in mid-September — will contribute to modestly lower borrowing costs for investors. This dynamic may help re-open the yield spread relative to cap rates. As such, additional sales activity could materialize, as elevated levels of dry powder capital await deployment. Encouraging tenant demand across most sectors should enhance the appeal of commercial real estate investment. In the first half, the apartment, retail, industrial, medical office and self-storage sectors all recorded positive net absorption.                                                                                                                                                                    

Policy shift could prove vital to Americans’ finances. September's FOMC decision launches what will likely be an interest rate lowering cycle that extends through next year. As these reductions take place, the cumulative effect for consumers will be more meaningful. Downward pressure on mortgage rates, auto loans and credit card fees will give households an opportunity to save an impactful amount of money. Entering July, total household debt was at a record $17.8 trillion, with the U.S. personal saving rate at its lowest reading since late 2022. A cycle of cuts would also provide relief for those in the market for a home, automobile or other big-ticket item.