How Commercial Real Estate Has Survived High Interest Rates with Jim Costello of MSCI

• Higher for longer: The latest Decoding Real Estate podcast explores the lasting effects of high interest rates on commercial real estate.

• Reject neglect: A new law in Denver, Colorado levies hefty fines on landlords who don’t keep their property up.

• Eastern influence: Chinese investors have invested more on American residential properties than ever, this time without any political backlash.

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Decoding Real Estate Podcast

How Commercial Real Estate Has Survived High Interest Rates with Jim Costello of MSCI

When interest rates shot up, everyone expected commercial real estate to fall down. A few banks with heavy exposure to real estate loans collapsed, lenders panicked, and suddenly refinancing looked like a luxury few could afford. But two years later, the crash never came. On the latest Decoding Real Estate podcast, MSCI’s chief economist Jim Costello explains why things didn’t play out the way so many predicted—and what that tells us about where the market is headed next.

Costello explains that alternative lenders like CMBS shops and private debt funds filled the gap left by cautious banks. These non-traditional players offered speed, flexibility, and just enough risk tolerance to keep deals alive, even if they came with slightly higher price tags. These alternative lenders are now reshaping how capital moves through the industry.

Just because we dodged one bullet doesn’t mean we’re in the clear. Global instability, foreign capital outflows, and a potential economic slowdown could all change the math again. As Costello puts it, buildings are just the boxes the economy lives in—and if the economy coughs, CRE could still catch a cold.

Overheard

Denver Cracks Down On Neglected Properties With Steep New Fines

Denver is tightening the screws on derelict property owners. This week, the City Council unanimously approved its first major update to derelict property laws since 2012, aiming to address more than 300 neglected buildings throughout the city. Under the amended ordinance, fines for non-compliance can now reach $5,000 per day, a sharp increase from the previous $999 cap, with each day counted as a separate violation.

Property owners will be required to meet with officials to create a remediation plan. If they fail to comply, the city can step in with emergency abatements, lock and fence properties, and even place liens or pursue criminal charges to recover costs. Historic properties are subject to additional oversight from preservation commissions.

City leaders say the tougher stance responds to neighborhood frustrations over safety hazards and declining property values caused by vacant eyesores. While most of the targeted properties are single-family homes, the list also includes commercial and historic buildings.

Officials estimate the changes could generate a 30% increase in administrative citations, adding revenue to Denver’s strained general fund. However, enforcing the ordinance will require extra staffing, a challenge as the city stares down a $250 million budget deficit and prepares for merit-based layoffs in August.

Chinese Investors Quietly Scoop Up Record Amounts of American Homes

After a brief retreat, Chinese investors are storming back into the U.S. housing market. Between April 2024 and March 2025, they spent $13.6 billion on U.S. homes—an 83% jump from the year before—making them once again the top foreign buyers of American residential real estate, according to a new report from the National Association of Realtors. That influx translated to roughly 11,600 home purchases, with California soaking up the largest share.

It’s not just the volume that’s notable—it’s the price tag. The average Chinese buyer spent about $1.16 million, more than double the national average. And a growing number of those deals were all-cash. While this isn’t a new phenomenon, the scale of this year’s surge has caught the industry’s attention, especially given the backdrop: a rocky Chinese property market, tightening capital controls, and persistent political tension between the U.S. and China.

What’s conspicuously missing this time around? The political backlash. Just a year or two ago, a handful of states passed or proposed laws restricting foreign land ownership, many of them targeting Chinese nationals directly. Florida, Texas, and South Dakota made headlines with bans or limitations on Chinese buyers purchasing agricultural or residential land near military bases, citing national security concerns. Critics argued the laws were overbroad or discriminatory, and legal challenges followed. But in 2025, the legislative noise has largely gone quiet. No new federal restrictions have materialized, and even the state-level push has lost steam.

The lack of regulation has created an opening, one that Chinese investors seem to be willing to take. With high-end U.S. homes seen as a safe haven, and few policy roadblocks currently in place, wealthy Chinese buyers are reasserting themselves in markets like California, New York, and Florida. That resurgence could be a lifeline for some luxury markets still wobbling under higher mortgage rates and slower domestic demand. With the Chinese real estate industry still on the ropes, we might continue to see a steady stream of investment in American real estate by Chinese nationals looking for a safe place to park their money.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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