SOURCE: Wall Street Journal Online

Last week's interest rate cut by the Federal Reserve gave hope to many people who follow the residential real-estate market, but the commercial investment markets have shrugged it off.

Industry watchers say the new interest rate could boost consumer confidence, but so far it hasn't been enough to significantly ameliorate the credit crunch. One factor is that the 10-year Treasury yield, to which fixed-rate, commercial mortgages are closely tied, has risen in the past week, increasing borrowing costs. Thus, many commercial deals could remain stalled, experts say.

"The Fed is making a concerted effort to avoid an economic slowdown, and that will likely keep property-leasing demand healthy in the short term and continue to support the perception that real-estate values and assets are a good place to be," Wachovia analyst Christopher Haley said.

Many industry watchers believe it will be months before the market fully recovers. "Some deals have gone through, and pricing for senior bonds is firming up, but the market is still a little bit choppy in trying to work its way back to health," said Tad Philipp, a managing director for Moody's Investors Service.

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