Rate cuts to support US commercial real estate recovery

Falling interest rates should help revive activity across the US commercial real estate market, supporting higher transaction and lending volumes, according to Vikram Killampali, senior director and manager of US commercial real estate finance syndications at Helaba.

Speaking to Real Asset Media at EXPO Real 2025, Killampali was taking part in what he said was the first panel hosted in Germany by a US real estate lending organisation, aimed at giving European investors greater visibility on conditions and opportunities in the US commercial real estate market.

He said the outlook for interest rates was turning more supportive for deal activity. “Right now, because there’s a story about declining interest rates, that should be positive for the commercial real estate market, and that should spur activity, acquisition volume and more loan volume for banks like Helaba,” he said.

He said the office sector continues to represent the main area of stress across US commercial real estate lending. “The challenge that I can see is consistent with what we’ve been experiencing for the past 18 months, which is in the office subsector, where there has been the most distress,” Killampali said.

He added that the impact of the pandemic continues to weigh on office markets in many US cities. “After COVID, the office subsector and a lot of markets got hit very, very badly, and that’s what caused a lot of loan losses for banks like Helaba and others with an office portfolio,” he said.

Despite these pressures, Killampali said he remains positive on the medium-term outlook. “With that said, [I’m] excited about the prospects of commercial real estate industry in the US in the next couple of years.”