Key facts
- Commercial real estate transaction volume hit $113B in the first quarter of 2026.
- CRE sales fell 33% in April, marking the first year-over-year decline since June 2025.
- The 10-year Treasury yield crossed 4.5% in May following the US entering a war with Iran.
- Many industry leaders expected rate cuts and a thawing market at the start of 2026.
- Insiders are divided between actively pursuing deals and waiting for market conditions to improve.
Commercial real estate experienced a strong start to 2026, with transaction volume hitting $113 billion in the first quarter, the highest since before interest rate hikes. However, this recovery momentum faltered in April following the United States' entry into war with Iran and a subsequent rise in the 10-year Treasury yield to over 4.5% in May. This led to a 33% year-over-year decline in CRE sales in April, the first such drop since June 2025.
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 initial optimism for 2026 had to be tempered. Many of the 62 real estate leaders surveyed by Bisnow had anticipated rate cuts and a market thaw, but found that tariffs and frozen rates reshaped the year.
At the midpoint of 2026, insiders are divided on their approach. Some are actively pursuing deals, viewing the current environment as an opportunity to acquire distressed assets or properties with strong fundamentals, while others are waiting for lower rates, permit approvals, or sellers to adjust to the current market reality. Those who are moving are doing so selectively and on their own terms, often driven by the necessity of dealing with nearly $1 trillion in CRE maturities.
Strategies vary widely, from disciplined deal-making and strategic debt management to focusing on niche sectors like affordable housing or life sciences where demand is less sensitive to rate cycles. Some investors are picking up distressed assets, while others are completing ongoing projects to avoid the costs of pausing. The overarching sentiment is one of adaptation, with many acknowledging that waiting for perfect conditions is not a viable strategy in the current market.