T
he city of St. Paul, Minnesota's capital and second-largest city, offers a glimpse into the importance of understanding macro trends in real estate investing. While local market knowledge is crucial, staying informed about broader economic shifts can provide a competitive edge. In a recent conversation with Lonnie Hendry, Chief Product Officer at Trepp, he emphasized the value of keeping the big picture in mind when operating in your local market.

    Recent events like new tariffs have highlighted the need to consider macro issues that may impact commercial real estate investing. As we wait for the full implications of these changes to unfold, here are key factors to keep in mind:

    Global capital flows can significantly affect borrowing costs and lender behavior. When interest rates rise, lenders tighten their underwriting standards, making it harder to secure financing or increasing costs. Insurance premiums, taxes, and tariffs also drive up project expenses, particularly for ground-up development or value-add renovations.

    Macro trends influence how people perceive the real estate market, leading to changes in buying and selling behavior. When interest rates drop or favorable economic policies are announced, markets may respond with increased transactions. Conversely, when rates rise, buyers often wait on the sidelines, while sellers become nervous.

    To stay informed without getting overwhelmed, set up a routine to follow macro trends and key indicators like Treasury yields, inflation rates, unemployment data, and policy announcements. Follow lender decisions and debt market trends by checking CMBS delinquency rates or subscribing to newsletters and podcasts that report on large-scale changes. By staying attuned to the bigger picture, you can make informed decisions and capitalize on upcoming opportunities in your local market.