The FOMC under new Fed Chairman Kevin Warsh voted unanimously at its June meeting to leave the federal funds rate at 3.50% to 3.75%. Excluding Chairman Warsh, meeting participants submitted projections for the quarterly Summary of Economic Projections (SEP) that revealed a significant hawkish shift from March. Nine out of 19 officials now forecast at least one rate hike by year-end (up from zero), while only one expects a cut (down from 12). Median projections showed the federal funds rate at 3.8% at the end of this year and 3.6% next year; real GDP at 2.2% this year and 2.3% next year; total PCE inflation at 3.6% this year (up from 2.7% in March) but down to 2.3% next year; and the unemployment rate steady at 4.3%.

“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” Warsh said in his opening statement. “Productivity growth and capital investment are both strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little. We recognize that inflation has been running well ahead of the Fed’s long-stated inflation goal of 2% that’s been going on for more than five years. Persistently high prices are a burden for the American people. But the recent past need not be prologue. I am pleased to report that members of the FOMC are unambiguous and unanimous: this Committee will deliver price stability.”

Warsh noted that the FOMC statement following the meeting was brief and didn’t include forward guidance. He also announced he is appointing a task force in five areas including Fed communications; balance sheet policy; data sources; productivity and jobs in an era of transformation; and drivers for inflation.

Headwinds Fail to Dampen Commercial Real Estate Momentum

Anthony Priest, a Director in Ariel Property Advisors’ Capital Services Group, observed that oil spikes, rising Treasury rates, and geopolitical tensions didn't dampen investor enthusiasm for commercial real estate in recent weeks.

“Our Capital Services team is managing an active pipeline nationwide that directly reflects this growing transaction momentum,” Priest said. “Furthermore, Ariel’s Research Group is projecting that investment sales activity in New York City during the first half of 2026 will exceed the dollar volume the city saw over the same six-month period last year.”

Recent New York City Financing Activity

Examples of recent refinance, construction and acquisition loans arranged by the Capital Services Group include:

• A $5,887,500 cash-out refinance loan for a recently renovated 46-unit, 20,920 SF multifamily complex in Dallas, TX. The seven-year loan was structured with a 5.75% fixed interest rate, 30-year amortization schedule, and 75% loan-to-value ratio, providing long-term stability and attractive leverage for the owner. Notably, approximately 80% of the loan proceeds represented cash-out financing, a structure that is uncommon in today's lending environment.
• A $5.5 million two-year, full-term interest only, non-recourse loan to finance a 24-unit condo conversion in Queens, NY. The terms included a rate of SOFR+5.25% and 75% LTC.
• A $2 million acquisition loan from a bridge lender for a 40,800 GSF, 10-unit industrial property in New Jersey. The terms included a 9.5% rate and 75% LTV.

Inside the Evolving Market Dynamics

Priest pointed out that underlying market mechanics are shifting rapidly across three major fronts, which is contributing to deal flow.

The era of extend and pretend is ending. For borrowers with loans originated over the last 10 years that were extended or are about to mature, lenders are forcing action: refinance, pay off the debt or execute a capital call. As a result, owners are lowering their expectations and their asking prices to meet the market, which is driving activity. We are actively working on several refinancing opportunities throughout New York City where creative lending through alternative capital sources resulted in multiple executable term sheets with increased leverage that helped bridge refinancing gaps for borrowers.

Market participants have given up on rates falling. For several years, borrowers kept delaying investments and refinancings, holding out hope that rates would fall. Now that significant rate drops are no longer expected, market participants are moving forward with transactions.

Long-time investors are exiting the market, replaced by a new generation. A generational shift is underway as long-time owners exit the market, paving the way for a new wave of buyers. Backed by ample capital, these incoming investors see an opportunity cost to staying on the sidelines. They believe they are buying at the cyclical bottom and are acquiring properties, including rent-stabilized buildings, at a low basis.
“Much like the buyer pool, we’re also seeing shifts in the lending universe,” Priest said. “After Ocean First Bank and Flushing Bank merged on June 1, the bank announced the sale of $1.4 billion in multifamily loans, which would eliminate the majority of the bank’s exposure to rent regulated properties in New York City. But while traditional banks are pulling back, we’re seeing private lenders stepping up. They believe in the city’s multifamily fundamentals and view rent stabilized assets as a great vehicle for new players to achieve serious market scale and deploy capital.”

Capital Adapts to a Restructuring Market

As the first half of 2026 outpaces last year's volume, the takeaway for New York City real estate is clear: the market isn't freezing - it’s evolving. Borrowers are finally trading interest rate anticipation for acceptance, adapting to a higher-for-longer reality. This acceptance, paired with pressure from lenders to resolve vintage debt, is unlocking a pipeline of opportunity. While traditional banks tighten their exposure to complex sectors like rent-regulated housing, private lenders and well-capitalized new entrants are moving aggressively to fill the void, proving that even in a turbulent macro climate, capital will always find a way to the table.