The Federal Reserve’s September rate hike and a 10-year Treasury yield at levels last seen in 2007 are reshaping commercial real estate dealmaking. For brokers and investors, the margin between a viable deal and a failed one has narrowed sharply, making accurate property-level data more critical than ever. Dan Mosher, co-founder and CEO of DealGround, an AI-powered commercial real estate intelligence platform, warns that higher rates tighten the screws on new deals but do not halt them entirely.
“The 10-year Treasury and the 30-year Treasury have all gone up to levels not seen in the last 20 years,” Mosher said. “That is going to tighten the screws a little bit on new deals getting done.” Even a half-point increase in interest rates can erode the cushion between a property’s rental income and its debt service, turning a seemingly solid deal into one that no longer pencils. “If I’m going to finance something and I’ve got a certain rent stream that’s coming from a property, if interest rates all of a sudden just went from five and a half percent to six percent, now all of a sudden the rental stream that I had may not be sufficient to generate return because I’m paying more interest on the debt,” Mosher explained.
With less room for error, Mosher advocates underwriting from actual property-level figures rather than broad market averages. “What are the rents on a specific property? Not the aggregated rents, not the hearsay rents that someone’s talking about, but the actual rents that appeared in the offering memorandum so that people can really analyze those deals before they make offers,” he said. The same precision applies to existing debt: knowing how much debt is on a property and at what rate reveals whether the owner faces distress and what a buyer can realistically pay. Brokers who combine a forward view on rates with actual cash flow can quickly assess a deal’s feasibility.
The challenge extends to pricing listings. Many sellers still cling to last year’s valuations, and Mosher notes it will take time for expectations to adjust. “I think there is a little bit of time that it’s going to take for the sellers to internalize that with interest rates going up, the value of their asset may be off from their expectations,” he said. A property priced on hope rather than current financing costs is likely to languish, but brokers armed with real comparable data can guide sellers toward a price that will actually trade. “The visibility of DealGround allows brokers to help sellers price their properties more closely to what it will trade for. Not what they hope they’re going to get, but what they actually can get in this market,” Mosher said.
Despite the headwinds, Mosher emphasizes that deals are still closing. “Deals are still getting done,” he said. Buyers and lenders remain active, but transactions now demand greater precision and sometimes a price adjustment. The practical takeaway for brokers is to tighten their inputs—underwrite from actual rents and debt on the specific property, price listings for today’s financing environment, and avoid relying on stale averages. Those seeking to integrate property-level rent, lease, and debt data into their workflow can review DealGround’s how it works page.
