Key facts
- Commercial real estate transaction volume was $113B in the first quarter of 2026.
- CRE sales experienced a 33% year-over-year decline in April.
- The 10-year Treasury yield crossed 4.5% in May.
- 62 real estate insiders shared their approaches to the current market.
- Many insiders are moving selectively, while others are waiting for lower rates or market changes.
Commercial real estate experienced a strong start to 2026, with transaction volume reaching $113 billion in the first quarter, the highest since before interest rate hikes. However, geopolitical events, including the United States going to war with Iran, and a rise in the 10-year Treasury yield to over 4.5% in May, led to a 33% year-over-year decline in CRE sales in April. This marked the first such decline since June 2025, dashing earlier hopes for a market recovery.
Newmark's earlier forecast of 'decaf stagflation'—characterized by below-trend growth, persistent inflation, and no rate relief—proved accurate. CBRE economist Matt Mowell acknowledged the industry's need to temper expectations for the remainder of the year. Many of the 62 real estate leaders surveyed by Bisnow had anticipated rate cuts and a thawing market entering 2025, but found their plans rewritten by tariffs and frozen rates by mid-2026.
Insiders are divided on their strategies. Some are actively pursuing deals, viewing the current environment as an opportunity to acquire distressed assets or properties with strong fundamentals and limited competition. These individuals emphasize problem-solving and disciplined investing, often adjusting their debt strategies to align with current rate conditions. They believe waiting for perfect conditions means missing out on opportunities.
Others are adopting a more cautious approach, waiting for lower interest rates, permit approvals, or for sellers to adjust their price expectations to reflect the current market reality. Some are moving forward with projects already underway due to the high cost of pausing, while holding off on new projects that relied on anticipated rate decreases. The political climate, including the war with Iran and elevated interest rates, is cited as a significant factor.
Specific sectors like affordable and workforce housing in areas like Miami are seeing continued demand unaffected by rate cycles, with developers delivering units despite headwinds. Conversely, some markets, like New York City, are described as nearly impossible to invest in due to high borrowing costs, anti-development policies, and budget deficits, prompting questions about the viability of investing there.