Fed’s decision could affect commercial real estate

The Federal Reserve's QE3 program could help the commercial market.

The Federal Reserve recently approved the QE3 initiative intended to keep mortgage rates low, and the decision may help increase commercial real estate investment, according to Diana Olick, real estate reporter for CNBC.

The third quantitative easing program from the bank could encourage more investors to look for more property yields. Additionally, the program could help real estate investment trusts in the market, as borrowing expenses could decline, Olick noted, citing Fitch Ratings. However, the price differences in the market now compared to the first two initiatives may not have as significant of an effect, due to prices not being able to make the large gains that occurred in the past.

"Asset values have rallied since that time and equities and commercial properties [at least in good markets] are already expensive and have less room to increase in value than they did during QE2, and interest rates are already so low," said Ryan Severino, senior economist for Reis, according to Olick.

Commercial property managers may experience a busier market due to the initiative, which could help rental prices and other real estate conditions improve.

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