Michael Becker Featured in Aerial View to Discuss Interest Rates and their Influence on Commercial Real Estate
In a recent interview on BNY Mellon’s Aerial View segment, Michael Becker shares insights on how declining interest rates could affect commercial real estate. While lower interest rates would help to alleviate stress, Becker emphasizes that interest rates alone do not dictate market dynamics and predicts challenges ahead in the commercial real estate market.
While lower interest rates would help to alleviate stress, Becker emphasizes that interest rates alone do not dictate market dynamics and predicts challenges ahead in the commercial real estate market.
"The refinancing market may not look any rosier even if we get three or four rate cuts in the next year. There's still going to be a lot of carnage in the commercial real estate market."
According to Michael, this has a direct impact on the economy and our clients’ retirement portfolios due to the tight correlation between lending conditions and unemployment. The majority of commercial real estate loans are held by small, local banks. Consequently, small banks are feeling the pressure from lower occupancy levels far more than their large counterparts.
When determining how this affects the labor market, the key statistic is that roughly half of the US labor force is employed by small businesses (fewer than 500 employees). Small banks are the primary lender to most of these small businesses, so tighter underwriting generally makes it much more difficult for small businesses to access credit to fund capital expenditures or hire new workers.
This dynamic can be seen in the chart below showing the strong correlation between tighter credit standards and unemployment. For example, in Q4 2023 & Q1 2024, we saw an alleviation in borrowing standards, but as of Spring 2024 had not yet seen a significant uptick in unemployment.
Using these data points as an understanding of the economy is an important piece of the puzzle to consider when constructing your retirement investment portfolio.
If you’re interested in learning more, book a call with our team.
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Michael is a highly knowledgeable and experienced partner at Toberman Becker in St. Louis. With his expertise in investment management, behavioral finance, and retirement planning, Michael is dedicated to providing his clients with the best financial guidance possible.
Having worked with clients on complex estate planning and developing investment strategies for a team of advisors, Michael’s experience spans across various areas of financial planning. What truly sets him apart is his unyielding desire to acquire knowledge for the betterment of his clients. At Toberman Becker, this commitment to continuous learning is the foundation upon which exceptional client experiences are built.
Michael earned a Bachelor of Science degree in Finance and Banking from the University of Missouri – Columbia. Additionally, he holds designations as a Chartered Financial Analyst (CFA) charterholder and Certified Financial Planner (CFP).
Beyond his professional achievements, Michael enjoys a fulfilling personal life in St. Louis. Living with his wife, Lindsey, and their beloved dog, Birk, he finds joy in activities such as golfing together and exploring local restaurants.