The sidewalks of midtown Manhattan are busier this week as more than 5,000 commercial real estate brokers, developers, investors and other stakeholders descend on New York City for one of the industry's largest events — and compare notes on the economy and issues affecting it.

This Urban Land Institute's annual Spring Conference, the biggest in the organization's history, comes at a point when turbulence wrought by the pandemic begins to settle as concerns over the economy's trajectory linger for property professionals.

Unknowns including future interest rate cuts, challenges in financing deals and the rising cost of labor are driving conversations about confidence.

Much of commercial real estate's condition stems from myriad macroeconomic issues, an arena Hillary Clinton knows all too well.

The former secretary of state and the conference's keynote speaker went around the world Tuesday in discussing the war in Ukraine, trade negotiations with China and the Israel-Hamas war, and how it all ties back to the role played by the United States and its economy.

"We're at a difficult juncture in global history," Clinton said. "Several things have happened simultaneously over the last 20-plus years that have had an amplified effect that has led to some of the challenges, uncertainty and instability that we see in the world today. There's enormous churn in the world right now."

Those events provide a backdrop for the U.S. commercial real estate market as it contends with its own challenges, such as housing affordability and record-high office vacancies.

"This is one of those moments where we really need to come together for the path forward," she said. "There's low occupancy in office space, what are we going to do about that? What kind of public-private partnerships can we create to help make those decisions? We have an opportunity to figure out some creative ways of thinking about all of this."

It's anyone's guess if and when interest rates will begin to fall, but their effect on the commercial real estate industry is top of mind among those deciding whether to finance deals.

While the Federal Reserve has said there will be several cuts through the remainder of the year, sticky inflation and robust job growth have made some lending professionals wary whether those rate drops will materialize. Already, the hikes implemented over the past year and a half have stifled development groundbreakings to capital expenditures, Mike Amoia, the head of asset strategy for MetLife Investment Management’s real estate division, said Tuesday during a capital markets session.

"Interest rates will be the big news for the year," Amoia said. "We had a generally healthy real estate economy heading into the pandemic, but interest rates have really brought that to a head. We're certainly looking at what the forecast for interest rates is and how sustainable they'll be in terms of future funding obligations."

Those thwarted bets on upcoming interest rate drops have also made lenders more hesitant to venture outside their comfort zones.

"No one has any idea what's happening with interest rates for the rest of the year," Sadhvi Subramanian, a market manager for US Bank, said at the session. "It's been really hard to figure that out, so everyone is sticking to their knitting, so to speak. They're looking at what they know and how to execute on it."

The financial impact of climate change is coming into focus for commercial real estate as a more quantifiable risk.

Lenders and investors are taking a closer look at issues such as natural disasters and rising sea levels before deciding whether to underwrite a project or property.

"With climate change, how can it not be a big issue facing a tangible asset class?" Basis Investment Group CEO Tammy Jones said Tuesday. "It blows my mind that, sometimes in this industry, we don't talk about it enough and ignore it until there's a casualty."

There's also a cost associated with properties that do or will need to comply with various climate change-related regulations, and investors are increasingly factoring those into their underwriting decisions.

"There are certain things we can do as lenders and we do what we can to track and monitor those and make appropriate investment decisions," MetLife's Amoia said. "Part of those decisions is, if you look at a building getting built today versus the existing supply that may need to comply, to evaluate the cost to get those older buildings in compliance. There's a clear difference between those building's values, and as an investor, you have to look at how to evaluate and manage those costs."