The April FOMC statement released yesterday revealed that while the Fed recognizes the labor market is strong and improving, economic activity is showing signs of contraction.

However, the Fed statements have been growing increasingly dovish since December, leading us to believe that a June rate hike has become unlikely. Once again, inflation has missed the committee's two-percent goal, which they see as a consequence of falling import prices. None of these factors necessarily indicate systemic issues with the economy, but instead uncertainty from the Fed that justifies postponing rate increases.

While the CMBS market has become less relevant since the recession, investors and borrowers are beginning to understand how the new reforms such as Reg AB II, Basel III, and the new risk retention rules will transform the industry. Although each piece of regulation is designed to curb negligent behavior, we are starting to get clarity on how the CMBS market will function under the stricter regulation. Obviously, the CMBS market will never function as it once did; however, this is a significant step towards finding a new normal.

Low-cost financing for commercial real estate projects has been a major factor for the significant increases in development projects in the past few years. However, while demand for funds is drying up, lenders are continuing to offer extremely favorable terms for development financing. Given the recent comments from the FOMC, low rates may persist, giving those with appetite for development projects an unprecedented opportunity.