Inflation picked back up in March, with CPI up 3.3% year-over-year and PCE up 3.5% year-over-year.

For CRE finance, this creates a double impact:

First, elevated inflation keeps pressure on interest rates.

Second, it increases operating expenses, insurance, utilities, payroll, repairs, and construction costs.

That means underwriting cannot rely only on rent growth assumptions. Expense growth matters just as much.

A deal that looks strong on revenue can still get squeezed if operating costs, debt service, and capex are not properly accounted for.

In today’s market, the best financing packages are not just about telling the upside story.

They also show lenders and investors that the downside has been thoughtfully underwritten.