Interest Rates and What They Mean For Tenants

Any tenants who follow financials news have probably heard of the imminent quantitative easing drawdown, and subsequent rise in interest rates. Some tenants may already know what this means for them in regards to their real estate, but others may still have questions. There are a infinite amount of ways an increase in interest rates could affect a tenants real estate, but for the purposes of this article we will stick to the basics.A rise in interest rates will usually lead to a rise in costs as well. If a tenant is considering purchasing a building with debt higher interest rates will obviously lead to higher debt service payments. If a tenant has a building already selected but is waiting to pull the trigger on it, the tenant should consider the added costs of waiting down the road. Treasury Notes and Bills are often referred to as risk free, and their rates are the most commonly cited risk free rate when analysts and other financial professionals evaluate decisions. A rise in the risk free rate will usually correspond to a rise in asset prices, so even if the tenant is not considering the use of debt to purchase a property waiting to decide could still have costs. In each of these scenarios it shows the importance of tenants currently in the market to purchase their premises to make quick decisions, but that does not mean to rush a decision. A real estate professional should help tenants identify which buildings will work for each tenant. There are hundreds of different scenarios where a rise in interest rates could affect tenant but we wanted to discuss two of the most obvious. Visit http://www.buildingsearch.com to get more information about Commercial Real Estate and find thousands office space, warehouse space, industrial space and retail space available for sale, lease and sublease.