What’s the difference between the economy and residential real estate markets and the commercial real estate market?  If you have been watching or listening to the news, you can easily answer this question with, “While the former is gaining their footing, the latter is still struggling.” And this is keeping the Federal Reserve from raising interest rates in the near term.

Although this is a definite downside to commercial real estate, this is also a definite upside to the residential markets who are now taking advantage of the suffering commercial real estate.  A strong bottom being formed gains the confidence of consumers and the interest rates that are dropping only enhances this confidence among consumers—that when they buy a new home, they will not lose money.

From Bloomberg.com:

If nonresidential real estate remains in the doldrums, the Fed may be forced to leave emergency-lending programs in place and keep its benchmark interest rate close to zero for longer than some investors expect, given positive signs elsewhere in the economy.

Commercial property is “certainly going to be a significant drag”  on growth, said Dean Maki, a former Fed researcher who is now chief U.S. economist in New York at Barclays Capital Inc., the investment-banking division of London-based Barclays Plc. “The bigger risk from it would be if it causes unexpected losses to financial firms that lead to another financial crisis.”