How Politicizing the Fed Could Warp Real Estate’s Rate Calculus

• Fed gets Cooked: Trump’s escalating fight with the Fed is shaking markets and could dramatically reshape the future of real estate.

• Northern edge: Canada outpaces U.S. in CRE growth, financing, and stability, says Colliers report.

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How Politicizing the Fed Could Warp Real Estate’s Rate Calculus

President Trump has escalated his campaign against the Federal Reserve by attempting to remove Governor Lisa Cook, a first-of-its-kind challenge to the institution’s independence. Citing allegations of mortgage fraud, Trump claimed he was firing Cook “for cause,” triggering a legal showdown that Cook is preparing to contest in court. Markets responded with apprehension: bond yields diverged, the dollar weakened, and investors fretted over what this might mean for monetary policy and central bank credibility. The move also rattled global markets, as allies and rivals alike watched closely to see whether the U.S. political system would erode one of its most trusted economic guardrails.

Trump’s maneuver feels less like a policy disagreement and more like a fight for influence. He has long pressed for lower interest rates, clashed with Chair Powell, and signaled intent to stack the Fed board with allies. If successful, he could tilt monetary decision-making in his direction, raising the risk that rate cuts could override macroeconomic concerns and potentially destabilize inflation expectations. For Trump, the calculus is clear: short-term growth and cheaper borrowing costs may prove politically advantageous heading into the election.

A politicized Fed adds unpredictability to a sector already sensitive to interest-rate swings. Developers, investors, and landlords now face more uncertainty around borrowing costs, refinancing timelines, and asset valuations. Every cash flow is now a bit harder to discount, and lenders are already signaling tighter underwriting standards as they try to price in political risk.

On the other hand, these moves to undermine the Fed could speed up the timeline to a rate cut. While the Fed chair has been steadfast about remaining independent and unbothered by the President's attacks, the pressure can start to play into decision-making at the margins. Traders and economists alike are recalibrating. The market now assigns a 75 percent chance to a September cut, down from the near 85–90 percent seen just days ago, underscoring the volatility of expectations in this new environment.

A rate cut would be a short-term win for the real estate industry, likely leading to higher valuations and some relief for owners facing steep refinancing cliffs. But in the long run, an unpredictable Fed would make it a lot harder for businesses to plan capital structures and for investors to gauge risk. Economic tea leaves might be hard to read, but at least they are more predictable than political gamesmanship—and that predictability has long been one of the Fed’s most valuable assets.

Overheard

Canada Emerges as the Steadier Bet for Global Real Estate Investors

Colliers is making the case that Canada currently represents a stronger commercial real estate market than the U.S. or other global peers. The firm points to three main factors: faster population growth, a more favorable lending environment, and relatively tighter supply. Unlike past cycles when global investors defaulted to the U.S. as a safe haven, Colliers argues that instability south of the border has altered that perception, opening the door for Canada to attract more global capital. Adam Jacobs, the firm’s head of research, stresses that Canada’s demographic growth in particular sets it apart, with immigration-driven gains far outpacing those of the U.S. and other advanced economies.

The financing landscape is another critical advantage. Canadian 10-year bond yields sit more than a full percentage point lower than U.S. levels, which has created meaningful breathing room for real estate refinancing and development. Given the highly leveraged nature of the sector, that difference is significant. Canada’s tighter supply also bolsters long-term asset values. With fewer square feet of office and retail space per capita compared to the U.S., Canadian landlords face less risk of oversupply eroding rents. Recent surveys show historically low retail vacancies and stable rent growth, reinforcing the case that demand is holding up even amid broader economic headwinds.

Finally, Colliers argues that Canadian real estate offers more resilience and stability over time. While office vacancies have risen, downtown markets remain healthier than many American counterparts struggling with remote work. Canada’s slower pace of development and the dominance of pension fund ownership reduce the risk of fire sales or sharp downturns. The result has been steadier property values and superior returns: Canada’s commercial property price index has stayed positive since 2022, even as U.S. values declined. Combined with stronger federal finances and a lower debt-to-GDP ratio than the U.S., Colliers positions Canada as not just an alternative, but a steadier, long-term bet for global real estate investors.

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