By Taylor Williams If inflation was the story of 2022, then basic economic theory dictates that interest rate hikes and their subsequent impacts will be the featured issue of 2023. For when it comes to whipping inflation, the Federal Reserve only has so many tools in its kit. The nation’s central bank can raise reserve requirements for lenders and sell Treasury notes all day long, but nothing has as direct and powerful of an effect on the monetary supply as movement in short-term interest rates. Simply put, higher interest rates discourage borrowing activity, which reduces the amount of money circulating in the system. In the past 12 months, the U.S. economy has seen no fewer than seven rate hikes totaling 425 basis points, with the Fed indicating that more increases are on the docket for 2023. Much like severe inflation itself, the rate hikes that inevitably follow rampant price escalation tend to touch nearly every facet of commercial real estate. Developers and investors respectively face higher interest rates on construction and acquisition loans. Brokers must adjust prices on properties they’re listing for sale or rent in response to these variables. End users tend to be somewhat insulated from these impacts, …
