South Florida Real Estate Development Experts Weigh in on Quarter-Point Interest Rate Cut

After a prolonged period of caution and delay, developers across South Florida are finally sensing a shift. The Federal Reserve’s recent decision to trim interest rates by 0.25%—and its signal of more cuts ahead—has begun to stir momentum in a market that has weathered high borrowing costs, soaring construction prices, and an insurance crisis.

In downtown Fort Lauderdale alone, 30 to 40 entitled residential projects have remained stalled—victims of a high-cost environment and softening rental rates. But as inflation cools and policy begins to ease, optimism is creeping back into the region’s development cycle.

“Rising interest rates, fast-rising construction costs, higher property insurance, and plateauing or even lowering rents had all contributed to a slowdown in residential development in downtowns,” said Alan Hooper, Co-Founder of Urban Street Development. “The slowdown caused construction bids to come back down to reality, and policy moves by the state helped lower insurance rates.”

For developers like Hooper, the Fed’s decision may mark a turning point. The immediate impact may be subtle, but the long-term implications could be profound. “The Fed’s 0.25% rate cut and anticipated future cuts could help turn the tide, sparking a gradual and positive shift in the development cycle,” he said. “We expect we will start to see the first wave of entitled projects in prime downtown locations over the next 12-18 months.”

While large multifamily projects often take years to build and stabilize, the scarcity of new supply has already created a tailwind for existing properties. “Because large multifamily projects take two to four years to build and lease up, the impact of a renewal won’t be immediate,” Hooper noted. “But at the same time, the lack of new supply and growing demand has helped stabilize existing inventory and strengthen the market.”

Downtown Fort Lauderdale may be among the first to benefit. Urban Street Development’s FAT Village, a 5.6-acre mixed-use project in Flagler Village, is advancing despite the macro headwinds. “We are preparing to top out T3 FAT Village, the region’s first mass timber office building,” Hooper shared. “Additional rate cuts would accelerate other nearby projects that support FAT Village’s retail, dining, and cultural experiences we are curating to bring added lifestyle to the neighborhood.”

Across South Florida, the sentiment is similar. Investors who have been sitting on the sidelines are now eyeing a return to action. According to Cary Cohen, Executive Vice President of Blanca Commercial Real Estate, the Fed’s dovish tone is unlocking pent-up demand.

“With the Fed rate cut, and signals of more to come, we anticipate an immediate impact on the South Florida market,” said Cohen. “Lower financing costs are a factor, but it’s important to note that optimism here has remained strong regardless, as South Florida continues to buck national trends.”

For capital sources watching the market, the Fed’s move serves as both a green light and a confidence booster. “The Fed’s commitment to supporting real estate investment will attract additional capital from local, national, and international buyers,” Cohen added. “Coupled with Florida’s pro-business environment and significant infrastructure projects, the region stands out as one of the most compelling markets in the country. Investors are clearly taking notice, and we expect that momentum to accelerate as financing costs ease.”

Isaac Toledano, Founder and CEO of BH Group, echoed the shift in sentiment. “Investors have been cautious while rates remain high, but even this modest cut could quickly change that,” he said. “Lower borrowing costs restore confidence, spur capital deployment, and accelerate transactions already underway.”

Toledano sees the potential for South Florida’s commercial and mixed-use real estate sectors to heat up even more as financial conditions improve. “South Florida’s market for income-producing commercial and mixed-use assets is already active, and this rate shift could further energize demand,” he explained.

But monetary policy isn’t the only force at play. Political changes up north could further drive migration and investment into Florida. “Political developments in New York could add another layer beyond the Fed’s decision,” said Toledano. “If [Zohran] Mamdani becomes the next mayor, we could see more companies and executives relocating to Florida, increasing the need for modern mixed-use developments that combine offices, upscale residences, retail, and lifestyle amenities. That momentum could spark new construction and redevelopment, reshaping the region’s commercial landscape.”

For now, the South Florida real estate market is entering a new chapter—one defined not by pause, but by potential. The long-awaited rate relief may not ignite a frenzy, but it’s already rekindling the kind of confidence developers and investors need to move forward.