Even when Federal Reserve Bank of Dallas President and CEO Lorie Logan is out of the office, she still thinks about potential pitfalls to the economy. And one of those, commercial real estate, has been on her mind lately.
The commercial property market “remains a risk,” Logan said last week in remarks at the Central Bank Research Association's annual meeting in New York. But not all commercial real estate is the same, she said, with "challenges concentrated at some banks and some types of properties, especially office."
The nation's office market has struggled during the pandemic. It remains a question mark due to uncertainty surrounding how hybrid work schedules will affect demand for office space in the long run.
Logan also said she is "very concerned" about whether inflation will return to a sustainable target rate in a timely manner and called for "modest" interest-rate increases to help ease price jumps.
"Credit conditions are continuing to evolve, but based on what we’ve seen so far, tighter credit conditions don’t seem likely to fully offset the need for a higher policy rate," Logan said at the meeting. "While banking stresses captured headlines this spring, bankers have been cutting back on credit availability since the fall."