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Market Update: Fed Meeting Today – Future Outlook on Rates

By: Scott Williams

The FOMC’s May meeting concludes today, and their announcement on interest rates and market outlook will be announced at 2pm ET. Current market expectations report a 95.6% chance that rates remain unchanged today.

The FOMC’s outlook for the rest of the year will be important. At their last meeting in March, they kept their rate expectations unchanged with a forecast of two cuts for the year. The market reacted favorably to the outlook and bond yields eased over the week following the Committee’s announcement. This meeting will be especially important as it is the Fed’s first meeting since the announcement of President Trumps proposed tariff policy, which has mostly been put on hold for 90 days since their initial announcement in early April.

Given the pause in the tariff implementation and short amount of time since their announcement, the FOMC will likely not have much backward data to analyze and incorporate into their projections; however, it will no doubt be top of mind and a hot topic of discussion for the meeting. Markets have experienced quite a bit of volatility since “Liberation Day” when the tariffs were announced. The US Treasury Market, which is especially important to CRE investors as it directly affects interest rates, has whipsawed substantially since the tariffs were announced, and the market will be looking to the Fed today for any insight on their interpretation of potential impacts.

As it sits today, the market is forecasting the highest probability for three cuts this year, with the first taking place in July.

As for the second cut, current market bets are at 48.7% for the September meeting, but a notable and material best of 30.9% are for rates to remain unchanged.

Forecasts for the rest of the year indicate the highest probability for a third cut, with a 37.7% expectation of the third cut to come in October. Current market futures do include a notable market expectation for a fourth cut to occur in December, but overall, the highest probability still remaining at just a third cut as we end the year.

It is worth noting that any time the market has the expectation of more cuts than the Fed is forecasting, there is potential for some market upset and upside in interest rates. That said, the FOMC only meets and communicates their official outlook eight times a year (www.federalreserve.gov/monetarypolicy/fomccalendars.htm), while the market is able to interpret data and change their outlook on a 24/7/365 basis. The most likely reason for the disparity in the Fed’s previous outlook and current market bets is likely driven by the implications of recent shifts in trade policy and the market’s expectation of their impact. While the Fed meeting concludes today, as mentioned above, the little time that has passed since the announcement of the tariffs, and constant on again off again nature of their implementation, will mean that the FOMC will likely need even more time before they can formally update their outlook.

Upstate Industrial Market Stays Hot as Isuzu Deal Adds Fuel to the Fire

The Greenville-Spartanburg industrial market continues to run strong into 2025, with high absorption, investor confidence, and regional growth spilling over into surrounding counties like Anderson, Greenwood, and Gaffney. Across the Upstate, stabilized and fully leased industrial assets remain in high demand, while developers and users continue to bet big on South Carolina’s logistics and manufacturing advantages.

In Q4 2024, Greenville-Spartanburg saw over 7.3 million square feet of gross absorption and more than 5.3 million square feet of net absorption — some of the highest on record. Automotive OEMs led the way with several leases topping 1 million square feet. While new construction is slowing — 7.5 million square feet delivered in 2024 — this is helping vacancy rates stabilize. Greenville currently sits at 6.4%, while Spartanburg remains elevated at over 14% due to a wave of new Class A product.

One of the biggest headlines: Isuzu North America’s acquisition of a 1 million-square-foot facility at 7745 Augusta Road in Piedmont, SC. The company plans to invest $280 million to convert the site into a major assembly plant producing its N-Series and F-Series trucks. Operations are expected to begin in 2027, creating over 700 new jobs and cementing Isuzu’s long-term commitment to the region.

Further south, Anderson County continues to be an active player with nearly 25.5 million square feet of industrial inventory and a healthy 6.68% vacancy rate. A recent 140,000-square-foot lease at 200 Masters Blvd. is a prime example of ongoing tenant demand. Meanwhile, Greenwood County presents opportunity with 8.1 million square feet of space but a higher vacancy rate of nearly 20%, giving tenants room to negotiate in a less competitive environment.

To the north, Cherokee County — home to Gaffney — tells a different story. With a tight 0.51% vacancy rate across nearly 12 million square feet, space is scarce and demand is high. A major recent win: Gaffney Bakery, LLC’s $96 million investment, which is set to create 260 jobs, underscoring the area’s growing appeal to advanced manufacturing and food production users.

Also worth noting is RealtyLink’s $37 million financing secured for a speculative development at the I-85/I-26 junction in Spartanburg. Nearly 460,000 square feet of space is on the way, with more build-to-suit potential in the pipeline.

“Regardless of the listing type – whether it be a stabilized investment sale, vacant building, or even a building for lease – I’m always flooded with calls from out-of-state investors looking to acquire industrial assets in our market. The demand is stronger than ever; the challenge lies in finding motivated sellers willing to part ways with their properties in a hot market where values and rental rates are steadily rising,” said Aline Capital’s Industrial Division Senior Advisor, Sam Faulkenberry.

For brokers and investors, the message is clear: fully leased, stabilized, and even vacant assets are still commanding attention, and users continue to absorb space where it aligns with logistics and labor access. The Upstate remains one of the Southeast’s most compelling industrial stories — and 2025 is shaping up to be another strong chapter.

The Ides of March (Madness)… Or Not?

By: JD Lehman

As a University of Louisville alum, I am typically thrilled when March comes around. The University’s flagship program, which is surprisingly not their men’s golf team, has the opportunity to typically compete for a national title in basketball. And, as a golfer, March Madness means The Masters and its “tradition unlike any other” is at hand.

Though my alma mater lost in the first round (their recent record in the tournament has been as barren as multifamily investment sales in the Southeast), I am optimistic for what’s to come for the program and for real estate in the Southeast. I’m not sure we need to “Beware the Ides of March” but perhaps can look more optimistically at what’s coming.

Interest Rate Stickiness

I did not coin the phrase “Agent of Chaos” when describing our current President, but the headlines certainly present him as such. While I believe that is a lot of noise with news outlets competing for airtime and our attention, Trump continues to make headlines on tariffs, creating economic uncertainty. Obviously, the market does not like that.

CNBC shows that since Trump was inaugurated on Jan 20, the DOW is down roughly 1,575 points or 3.6%. It’s down over 3,000 points from its high on Jan. 30th.

If you remember back in the fall of ’24, rates shot up on the expectation Trump would win the election and his policies would be inflationary. He has not been shy about his stance on tariffs and has not changed his outlook since taking office. I think that is accurate, though there is no consensus amongst anyone as to how inflationary his policies will be.
That said, rates are in 55 bps from their high in early 2025. That’s quite substantial. As it stands on the last day of Q1 2025, the 10-Year Treasury sits at 4.25%. Even with economic uncertainty, it’s been in the 4.30% range for the last 30 days. That stabilization has come with an active new cycle with unpredictable policies and world wide events.

10-Year Treasury: Last 12 Months

While there are a few reasons as to why that has occurred, which I won’t bore you with, most groups we work with expect Treasury rates (longer term, permanent debt) to stay in this range, meaning the coupon can range anywhere from the low 5% – mid 6% range for permanent debt. While I know that’s a wide range, most of us can do business here as real estate prices are down from their peak.
Even with uncertainty in the global economy, the Fed is still looking to cut rates by 0.50% this year. That’s good news for us all as every little bit helps.

Longer term rates have come in and appear sticky in this 4.0% – 4.50% range and short term rates should move in this year, relieving a little bit of the pressure on floating rate debt.

Lender Appetite

Even more nuanced is the appetite for real estate credit from lenders and their investors. The coupon rate is based on the risk – free rate, generally regarded as a UST, and a spread, or the risk-premium. Given real estate’s decline in value, most investors who buy securities backed by real estate believe being at 65% LTV of current value is a great, risk-adjusted return. As a result, we’re seeing spreads get more and more competitive. We recently priced a Small-Balance, 5-year Agency deal with a spread below 1.5%. With the current yield curve, that rate today is under 5.5%, with the chance to go even lower. Not too shabby.
On top of that, most lenders we speak with want to double their allocation from last year to this year. With all the money to get out the door, we’re expecting spreads to continue to come in throughout the year. That is most welcome as there is liquidity needed for real estate markets to function properly. Additionally, we are seeing creative programs come to market that offer an alternative to long term, permanent debt. They are not priced as attractively but offer better prepay, more proceeds and interest only, with only a slightly higher coupon. This is very welcome given what is coming.

Maturities

Much like seeing a Pitino in March, the real estate world cannot evade the coming loan maturities. We estimate there are over $1.2T in loan maturies this year, based on what was extended from last year. For those counting at home, that’s a whole lot!
While there is real pain for some of these assets given when they were acquired and what’s transpired since, this will create opportunities for many investors. The combustion of ’20-’22 could not continue and the market had to reset a little bit.
With lenders starting to foreclose on assets and not granting more extensions, people are being forced to make a decision. For those buyers who are well-capitalized, that creates opportunity. I think our clients will be able to leverage that to their advantage.

Investor Appetite

I think investors are sensing what I am. Like me when I came off the bench to miss a three pointer in high school, we’re seeing investors get excited about opportunities. The bid-ask spread seems to be narrowing as folks under pressure want out and buyer’s return expectations seem moderate. Though there are headwinds to be sure, with rent being flat, opex increasing in a variety of ways, and rates still higher than what some would prefer, the folks investing in areas with growth seem to be active again. It seems the investment thesis is simple again – buy at a good basis and let the market come to you. The “double your money in 2 years” based on the ZIRP seems to be waning. I think that’s a good thing as I’m not sure that’s what investing in real estate is about.

Conclusion

While I am not cheering for a team anymore, I am excited to see who is crowned the national champion for 2024-2025. And I’m excited this year to start transacting again. Loan maturities, better rates and lenders focused on providing liquidity to the market have us looking forward.

Understanding the RV Park Market: Why Sellers Should Adjust Expectations and Consider Seller Financing

By: Shalin Patel

The RV park market has experienced remarkable growth in recent years, particularly during the COVID-19 pandemic. During this time, more people sought safe, affordable, and socially distant travel options, which led to RV parks being at full capacity and low interest rates creating an ideal environment for sellers to ask for premium prices. Fast forward to today, and the landscape has shifted. RV parks are no longer at full capacity, interest rates have risen, and buyers are becoming more cautious. This change makes it harder for sellers to command the same prices they could a few years ago.

Why Sellers Are Still Asking for High Prices

It’s understandable why some sellers still expect to sell their RV parks for the high prices seen during the pandemic. With demand at its peak, low interest rates, and RV parks consistently full, the conditions were perfect for sellers to ask for top dollar. Buyers were eager to purchase, knowing they could secure favorable financing and maintain strong occupancy rates. As a result, RV parks were highly sought after, leading to a seller’s market where prices soared.

However, the reality has shifted. With rising interest rates, a change in travel behavior, and increased economic uncertainty, RV parks are no longer in the same position as they were during the pandemic. Occupancy rates have dropped, and buyers now face higher financing costs. Sellers who are still asking for premium prices may face longer timelines to sell or may have to lower their asking price to find serious buyers.

Educating Sellers on the New Market Realities

It’s important for sellers to realize that the market has changed. What worked during the pandemic might not be applicable today. Buyers are more cautious and discerning, and financing is more expensive with the rise in interest rates. Sellers who continue to expect pandemic-era prices may struggle to sell, or they could find themselves needing to significantly lower their asking price.
To succeed in today’s market, sellers need to educate themselves about the current economic context and adjust their expectations accordingly. This means understanding that the high prices seen during the pandemic are no longer realistic, and that they may need to lower their asking price to attract serious buyers. It’s also critical for sellers to stay informed about market trends, work with experienced brokers, and be flexible in negotiations.

Why Seller Financing Can Help Sellers Get a Better Price

One strategy that can help sellers achieve a better sale price is seller financing. Seller financing, or owner financing, allows the seller to act as the lender, financing the buyer’s purchase directly—often with more flexible terms than traditional lenders offer.
In a market where interest rates are higher, seller financing can be a game-changer. By offering financing directly to buyers, sellers can attract a wider pool of potential buyers, particularly those who may struggle to secure financing from traditional lenders. Most banks are hesitant to lend on RV parks because they view them as a more risky or niche investment. However, as the RV park sector becomes more mainstream—similar to mobile home parks—seller financing may be the only viable option until banks start offering more favorable loan terms for this type of property.

Additionally, seller financing can allow sellers to command a higher price for their property because they offer buyers an attractive, flexible financing option in a market where traditional financing is less accessible. The ability to offer lower interest rates or more favorable terms than traditional banks could result in a higher final price for the seller. This is especially true because the interest payments alone can add hundreds of thousands of dollars to the seller’s bottom line over the life of the loan.

Real-World Success with Seller Financing

In fact, every RV park deal I’ve closed in 2024 and 2025 has been seller financed—and in each case, it helped the seller get the price they wanted and the buyer secure the terms they were looking for in a financing deal they wouldn’t have been able to get through traditional banks. By using seller financing, these deals were structured to meet both parties’ needs, with the seller achieving their desired price and the buyer able to access a more manageable financing option than what traditional banks could offer. Seller financing allowed the transactions to move quickly and smoothly, providing a win-win situation for both the seller and the buyer.

The Benefits of Seller Financing for RV Park Sellers

1. Higher Price Potential: Buyers are often willing to pay a higher price for more favorable financing terms, especially in a market with high interest rates. Offering seller financing can make the property more attractive, allowing sellers to command a higher price.
2. Wider Pool of Buyers: Seller financing can attract buyers who may not be able to secure financing through traditional banks, increasing the pool of potential buyers.
3. Faster Transactions: Seller financing can streamline the process and reduce closing times, as fewer third parties (like banks) are involved in the transaction.
4. Ongoing Income Stream: With seller financing, sellers can continue to receive a steady stream of income in the form of monthly payments, which can be appealing for those seeking ongoing cash flow after the sale.
5. Tax Advantages: Seller financing can provide tax advantages, such as the ability to defer taxes on the sale, depending on how the deal is structured.
6. Increased Bottom Line: The interest payments from seller financing can add a significant amount to the seller’s profit over time. In fact, the interest alone could contribute hundreds of thousands of dollars, making seller financing a profitable strategy for maximizing the sale price.

Conclusion

The RV park market has evolved since the boom days of the COVID-19 pandemic. While sellers may have enjoyed favorable conditions with low interest rates and high occupancy rates, today’s market demands a different approach. Sellers must adjust their expectations, be flexible in pricing, and consider creative strategies like seller financing to achieve a successful sale. As most traditional banks remain hesitant to lend on RV parks, seller financing can often be the only option for buyers looking to finance their purchase, making it a powerful tool for sellers who are looking to close a deal at a price they’re happy with.

By educating themselves on the current market conditions and exploring alternative financing options, RV park sellers can navigate today’s more challenging environment, potentially securing a better sale price and moving their property faster. Seller financing not only opens up more buyers but also allows sellers to secure a higher sale price and maximize their profit, making it a valuable strategy in today’s market.

Effects of Tariffs on Real Estate Investing

By: Andrew Carter

With tariffs taking center stage this week, the economy experienced significant volatility. The implementation of tariffs targeting Canada, Mexico, and China spurred what many are calling the “tariff trade.” This development introduced heightened uncertainty for equity investors, leading to a market sell-off as many sought safer, risk-averse alternatives. The sell-off exerted considerable downward pressure on bond yields, causing Treasury rates to drop sharply—nearly 70 basis points from their 2025 calendar year high. However, the 10-Year Treasury has already started to recover, rising approximately 12.5 basis points from its one-week low of 4.10%. Investors who seized the opportunity during this pronounced dip are likely to benefit as Treasury yields stabilize and regain balance.

The long-term effects of these tariffs remain uncertain, but their impact, combined with other influencing factors, has led the futures market to anticipate the possibility of one to two additional rate cuts by the Fed this year. Should these anticipated cuts materialize, they are expected to exert prolonged downward pressure on Treasuries. While the market will require a few more days to fully digest this information, the current expectation is that the 10-Year Treasury will likely stabilize within the 4.25% to low 4% range and maintain this steadiness for the remainder of the year. Additionally, abundant market liquidity has driven credit spreads tighter, contributing to a generally more favorable interest rate environment for real estate investors.

Takeaways from the 2025 Mortgage Bankers Association Conference

By: Scott Williams

Just got back from the Mortgage Bankers Association #CREF conference and want to share my main takeaways while they are fresh. That said, the red-eye back from San Diego was terribly bumpy last night and I am going on about 30 hours straight – so please bear with me.

– Attendance was down. I handicapped it at 25% – 30%. Someone said it felt more like 50%. It was tough to tell, but it was material. I think this was a factor of a lot of people on the lending side attending CREFC in Miami in January, and also NMHC. It seemed like sentiment from both of those conferences was the debt will be there, so there was less focus coming to this conference to learn about the debt markets.

– There is SO MUCH LIQUIDITY in CRE debt right now. The risk-adjusted return on CRE debt, private credit, and paper is SEXY. We only spoke to one group who had a modest increase in their allocation for CRE this year from $1.1 – $1.2ish B. Most groups we talked to were increasing their goals / allocations by 50%! These are groups that did $2B last year saying they are going to do $3B and groups that did $4B saying they hope to do $6B. In addition to bigger allocations, there are totally new and very competitive strategies, including several Agency alternative players coming into the market.

– Fannie and Freddie are painfully slow getting initial feedback on deals. That said, they know it and are staffing up to handle it. This was much welcome news.

– FRAUD was rampant in the height of the 2021 – 2022 gang buster transaction years. This was driven by fraudulent brokers, but also fraudulent Borrowers. It was easy to accomplish and easy to hide at 0% rates, but the tougher things have gotten the more it has all come to the surface. The scrutiny deals are getting on the front-end mostly from the Agencies sucks, but it is pretty warranted all things considered. This should get better with time and as they become more and more confident that they have dealt with the bad actors.

– Lender portfolios are holding up well. There is a lot less distress than I expected, especially in some of the more aggressive bridge lender portfolios. There was only one group we spoke to who had sizeable defaults, and they have brought a top-dog workout guy in to handle it. Lenders are also in the driver’s seat on the deals that are in trouble and are working from a position of power. They are moving quickly where needed. They are happy to continue to work with Borrowers who are playing nice, but there is no more stay for free.

– Sentiment on rates is pretty good. Most think that (outside of some days like today) the 10-year will be sticky at the 4.5% range as an upward bound, and that there is a chance the market works to move the long-end of the curve lower towards 4%. It might take all year, or maybe into next, but not a lot of surprise to the upside on rates is expected.

– Spreads are super tight and could even get better if the yield curve steepens. This goes along with the abundant liquidity and demand for paper in the market, but this theme should maintain for the year and will be welcomed by Borrowers.

– Equity is still working hard to make deals work. Return expectations have not come in and as hard is debt is trying to bridge the gap – deals are still tough. For deals that pencil, there will be quite a bit of appetite from the market.

This was my 10th consecutive CREF conference. That seemed like a meaningful milestone. It was so great to see old friends and catch up over a beer (or taco) and talk about how we met and all of our experiences over the past decade. With the lower attendance, the ones that were there were really the dedicated soldiers / lifers of CRE finance. True experts that I have been blessed to come up with and around and learn from. Hearing their perspective and expertise is always a privilege. I also met several new folks and made some new capital relationships that I am extremely excited about. In our business, knowledge is great, but connections are key. I appreciate everyone who took the time to meet with JD Lehman and me. I’m excited about a great and dynamic 2025 in CRE lending!