After several years of recalibration, the commercial real estate (CRE) market is regaining stability. The second half of 2025 marked a turning point, interest rates steadied, inflation cooled, and lending conditions improved. These changes are bringing liquidity back into the market and rebuilding investor confidence heading into 2026.
The year ahead won’t bring a sudden boom, but it signals a strong, steady recovery built on healthier market fundamentals and consistent capital flow.
Stability Is Restoring Confidence
In 2021, record-low interest rates and easy capital fueled rapid appreciation and record deal flow. When borrowing costs rose in 2022 and 2023, deal activity slowed sharply. Sellers held on to peak valuations, buyers struggled to make returns work, and lenders became cautious.
That changed in late 2025. The Federal Reserve’s shift to a more accommodative stance created much-needed consistency in the cost of capital. The 10-Year Treasury yield, a key benchmark for CRE loans, fell below 4% for the first time since before the pandemic. Inflation has continued to cool, and long-term borrowing costs are stabilizing.
That stability is unlocking capital. We’re now operating in an environment where investors can underwrite with confidence, and lenders are expanding their credit appetite. Predictability has returned to the market, and that’s what drives deals.
Capital Markets Regain Momentum
Investor sentiment has improved every quarter since mid-2025, and the outlook for 2026 remains positive. Deloitte’s 2026 Commercial Real Estate Outlook reports that 75% of global investors plan to increase their real estate allocations over the next 12 to 18 months, a clear indicator of renewed confidence.
We’re seeing that play out firsthand. Institutional and private equity clients are calling capital again and forming new funds to capture opportunities created by stabilized rates. Many are pairing institutional equity with moderate leverage to achieve return targets in the 10–12% range.
Banks are also back in the market. Credit committees are more comfortable, and liquidity is improving across the board.
That flow of capital, from both equity and debt is what’s fueling this new phase of market activity.
Sector Momentum: Signs of Expansion
Not every asset class is moving at the same pace, but several are setting the tone for 2026.
Industrial Real Estate
Leasing climbed 15% in Q3 2025. Demand remains strong in logistics, manufacturing, and warehouse sectors. Build-to-suit projects now account for nearly two-thirds of new development, signaling steady tenant and investor confidence.
Multifamily Real Estate
Multifamily continues to draw consistent capital. Transaction volume is rising, rent growth has stabilized, and suburban properties are performing well as vacancies decline.
Office
The office sector is evolving, but momentum is returning. Leasing velocity reached its highest level since 2019, with suburban and repositioned assets outperforming downtown properties. Owners are investing in adaptive reuse to attract tenants and long-term stability.
Across all three sectors, the common thread is balance, sustainable demand, disciplined pricing, and a more rational capital environment.
Capital Confidence Returns
We’re seeing institutional investors fully re-engaged. Most operate through fund structures where General Partners (GPs) deploy capital raised from Limited Partners (LPs) such as pension funds, insurance firms, and endowments.
With borrowing costs lower, these groups are again using leverage strategically to meet performance targets. Billions in undeployed capital, “dry powder”, are being allocated toward acquisitions, refinancings, and value-add projects.
For lenders and investors alike, underwriting is more predictable, pricing is more rational, and capital is being put to work with purpose.
Lending volumes are projected to rise by 30–35% in 2026, with deal pipelines expanding across major asset classes. Investors are moving from cautious observation to active engagement, and banks are supporting that momentum with accessible financing.
At EBI Consulting, we’re seeing that confidence firsthand. Our clients, from institutional investors to commercial lenders, are positioning for growth and moving decisively on new opportunities.
As 2026 unfolds, the industry is entering a period of sustainable expansion built on stable rates, accessible capital, and realistic underwriting. That foundation will support growth not just this year, but for the long term.
Is the improving market increasing your deal flow?
Whether you’re acquiring a new asset, refinancing, or preparing for a value-add strategy, EBI’s due diligence and advisory teams can support every step of your next transaction.
Reach out to EBI Consulting to ensure your next property move is informed, compliant, and positioned for long-term success.