Key facts
- Commercial real estate transaction volume hit $113B in Q1 2026, a strong start to the year.
- The market shifted following the U.S. war with Iran and a rise in the 10-year Treasury yield to over 4.5% in May.
- CRE sales fell 33% year-over-year in April.
- Industry insiders are divided between actively pursuing deals and waiting for improved market conditions.
- Challenges include high rates, inflation, and regulatory/political hurdles in various markets.
Commercial real estate experienced a strong start to 2026, with transaction volume reaching $113 billion in the first quarter, the highest since before the recent interest rate hikes. However, this momentum faltered in April, with sales falling 33% year-over-year, following the U.S. entering a war with Iran and the 10-year Treasury yield crossing 4.5% in May. This downturn aligned with predictions of 'decaf stagflation'—below-trend growth and persistent inflation without rate relief.
At the midpoint of the year, 62 real estate insiders from over 30 markets shared their strategies. While some are actively pursuing distressed assets and new deals, viewing the current environment as an opportunity, others are adopting a wait-and-see approach, anticipating lower rates or sellers willing to adjust to the current market realities. Many are moving selectively and on their own terms, driven by necessity rather than improved conditions.
Respondents highlighted various challenges, including high borrowing costs, the difficulty of securing bridge debt, and bureaucratic delays. Some New York-based professionals expressed concerns about the city's investment climate due to anti-development policies and high costs. Despite the headwinds, sectors like affordable and workforce housing in areas like Miami continue to see demand, with developers pushing forward with projects.
Strategies vary widely: some are being more disciplined with debt, opting for shorter-term transitional debt, while others are focusing on markets with limited supply and high barriers to entry. The consensus is that waiting for perfect conditions is not a viable strategy, and problem-solving is key to business success in the current CRE landscape.