A Mid-Year Read for CRE Decision-Makers
BY
Nolan Previte | President, Real Estate | EBI Consulting
FOR
CRE Owners, Investors, Lenders & Developers
The Question We Keep Hearing
What The Book Is Telling Us
The First Half Set The Pattern. The Second Half Will Test It.
UP
UP
3,400+
4,500+
Three Things The Market Is Telling Us.
Signal 01
Capital Is Moving Again, Across A Wider Field.
Capital Is Coming From New Places.
The Diligence Threshold Has Moved.
The Lending Environment, Visualized.
CRE Lending Volume Forecast
Annual originations, $ billions
Source: Mortgage Bankers Association CREF Forecast, February 2026.
Construction Input Cost Pressure
Risk Is Being Repriced.
The ESA Is The Tell.
There’s also a fourth factor worth naming: the lender behind a deal is increasingly a different lender than it was three years ago. With debt funds, mortgage REITs, and private credit now writing more than a third of non-agency CRE loans, diligence requirements are evolving too. Alternative lenders often underwrite to asset-level cash flow and structural specifics rather than borrower balance sheet — which means a defensible ESA, a current PCA, and a clean environmental record have become more important to closing, not less. The borrower whose diligence package can satisfy both a bank credit committee and a debt fund’s investment committee is the borrower closing first.
The downstream effect: ASTM E1527-21 compliance, current EPA and state-level vapor intrusion guidance, and PFAS-aware site investigations aren’t differentiators anymore. They’re the price of admission. The properties closing fastest in H2 will be the ones whose diligence package was built for the underwriter that exists today.
Looking Forward
Three Things We’re Anticipating For The Back Half Of 2026.
H1 established the pattern. H2 will test how durable it is. Three areas where we expect the back half of the year to land, based on what the first half has already put on paper.
Anticipating 01
Originations Will Keep Pressuring Diligence Capacity.
With H1 already running ahead of pace and full-year originations on track for their largest jump since 2021 [8], the constraint heading into H2 isn’t capital. It’s how fast diligence comes back. Buyers and lenders working Q3 and Q4 deals should start environmental, structural, and energy reads earlier than they did in 2024.
For Owners & Investors
If your closing window is under 60 days, get diligence started before LOI, not after. The deals that actually close on schedule are the ones whose buyers stopped treating diligence as a sequential step.
Anticipating 02
Phase I And Core Diligence Will Stay Elevated.
Phase I ESA volume and core acquisition diligence climbed consistently across H1. More deals heading into LOI, more lenders ordering reports earlier, more parallel streams on the same property. We expect that pace to hold or grow through H2, particularly as maturing 2022-era loans push refinancing into the queue.
For Lenders
The borrower packages clearing credit committee fastest are the ones with current ASTM E1527-21 ESAs and defensible PCAs already in hand. Pre-LOI diligence is becoming a screening criterion, not just a closing condition.
Anticipating 03
The Bid-Ask Spread: Closing On Quality, Widening On Everything Else.
The recovery isn’t uniform. CMBS office delinquency rates remain above 12% [10], even as Sun Belt growth markets and well-leased income properties see competitive bids again. Vacant office, weak retail, and value-add deals are also transacting, but at wider spreads and deeper diligence asks. Both ends of the market need better-prepared diligence to close. The gap between them is likely to keep growing through H2.
For Developers & Repositioning
Capex reserves modeled on 2024 input prices may not hold up against today’s committee scrutiny. Reprice your reserves yourself, before the buyer’s consultant does it for you.
Practical Application
Five Questions Before
Your Next Move In H2.
The H2 2026 CRE Due Diligence Pre-Flight
If you’re acquiring, refinancing, developing, or disposing in the back half of 2026, start here.
How current is your environmental baseline?
A Phase I ESA pre-dating mid-2024 likely doesn’t reflect current ASTM E1527-21 vapor intrusion guidance, evolving PFAS scrutiny, or what underwriting is asking for today.
Have you stress-tested capex reserves against materials inflation?
Steel, aluminum, and copper at 50% duties are pushing input prices at a 12.6% annualized clip — the fastest pace since 2022. Pre-tariff 2024 reserves may not survive committee.
Is your physical asset story defensible to your next buyer?
Documented building condition, capex plans, and operational data are increasingly part of how institutional capital prices bids.
Do you know which assets carry latent environmental liability?
Site investigation and remediation are among the most under-reserved line items in failed deals. Identify the exposure before the buyer’s consultant does.
Can your diligence partner move at deal speed?
As originations volume climbs through the year, qualified diligence capacity is becoming a constraint. Turnaround time is part of the conversation now, not an assumption.
An H2 Move On Your Desk?
Talk To Someone Already Inside The Pattern.
EBI works with owners, investors, lenders, and developers across the full property lifecycle: acquisition due diligence, remediation, energy strategy, capital improvement planning, and exit verification. If you’re underwriting, refinancing, building, or repositioning in H2, our team is happy to share what we’re seeing in the market.