Insights from TRD with Bob Knakal: Real estate prices to drop amid interest rate hikes

November 29, 2010 03:04PM

Experts say the weak commercial real estate sales market was supported in part over the past year by low interest rates. But that environment began to change two weeks ago when interest rates jumped by nearly a quarter of a point. In this week’s installment of Insights from The Real Deal, Robert Knakal, chairman of Massey Knakal Realty Services, said the rise in interest rates will push real estate prices down. “A buyer is going to have to offer less money if they still want to maintain the rate of return that they need to achieve on that particular property,” Knakal said. And although interest rates were by no means the only factor in selling a property, it is possible higher rates could lead some sellers to pull properties off the market. “If a seller can’t achieve the price that they need to achieve in order to sell,” he said, “they may take the properties off the market.” (Have a comment about The Real Deal’s new Web feature? E-mail Lauren Elkies at le@therealdeal.com.)