Rubin previously explained the effect of rising rates on the office sector: “We’re seeing the effect because there’s definitely a downturn – because we’re in a time of great uncertainty, lenders are pulling back because that they don’t know what’s going to happen,” Rubin said. “Lenders are tightening up underwriting because they’re focused on covering the debt they have — if the properties’ cash flow will be able to bear the debt with a higher interest rate – and they’re not quite sure what the outcome will be when the property is finally sold and they’re worried about paying off the debt, maturing or selling the property. Lenders are rightly cautious, and equity is rightly cautious, so that means everything has slowed down, and I’ve seen deals suspended or completely canceled because of that.

Read more: Rising interest rates hold back commercial real estate

Still, that scenario doesn’t apply across the board, he noted: “The good thing is that real estate — real estate itself — is doing very well,” Rubin told Mortgage Professional America. in a recent telephone interview. “The fundamentals are good. There is a lot of demand for all sectors of real estate except perhaps the office, which is a complicated thing in itself. But if you look at multifamily, if you look at industrial, — even retail — it’s doing well. Hotels are doing well. The properties are doing really well, generating cash flow. And so, the problems we face today are not real estate problems; they are exogenous economic problems.

Call it the economic triumvirate: “The stakes are sort of the triple threat: interest rates, inflation and recession. And I put them in that order because the biggest threat is interest rates, the next is inflation, and the next is recession. Real estate is not really correlated to GDP – hotels do, but not the rest of real estate. Real estate correlates with the job market, and the job market is amazing. So we approach that with great strength: we have continued employment growth, which is the main driver of real estate. Job growth this year is already three million in 2022 alone, and we have around 11 million jobs open. The unemployment rate is at a historic low, down to 3.5%. So we’ve got this really robust jobs situation, and that’s going to basically protect real estate from the many whirlwinds around it.

Still, investors aren’t used to the pain once the dust settles: “Yes, there’s no doubt that rising interest rates will have an impact on real estate investing,” Rubin said. “But the pain comes from transitioning from this artificially low interest rate environment that we’ve been in, to a market interest rate environment that we’re coming out of the dip in. And we don’t really know what it looks like right now there is no way to predict.