How would you summarize the capital markets environment in 2025? What was the status of investor confidence (i.e., improve, weaken or hold steady)?

Capital markets in 2025 opened on an optimistic note, with broad expectations that the dry powder still sitting on the sidelines would re‑enter the market, and activity would accelerate. That momentum held through the first quarter. In the spring, however, volatility from tariffs and fluctuating macroeconomic data caused investors to pause and reassess. As the year unfolded and the markets adapted to the volatility, investor interest returned. Confidence ultimately stabilized and gradually strengthened, ending the year on solid ground, setting a constructive backdrop for 2026.

How did 2025 rate movements affect deal volume and pricing? What rate or policy expectations are shaping the 2026 outlook?

The rate cuts in 2025 encouraged some investors to re-enter the market, but pricing remained disciplined as buyers and sellers worked through new benchmarks. At the same time, financing activity in sectors like multifamily, industrial, and logistics remained healthy, and the CMBS market roared back to life.

Looking to 2026, expectations for a more stable rate environment and clearer policy signals are driving renewed momentum. There’s a lot of capital that didn’t get deployed in 2025, and that dry powder should support higher transaction activity and more confidence in pricing across asset classes, including the office sector, particularly for well-located buildings with market-specific amenities.

Are lenders showing more willingness to finance transactions today than at the start of 2025? Why or why not? Which lender types were more active this past year? How about more selective? Will this trend continue into 2026?

Lenders are more willing to finance transactions today than they were at the start of 2025, but it’s been a gradual shift. Early last year, there was still a lot of caution, but as the volatility and headline-driven noise was drowned out, fundamentals remained resilient, and capital became more comfortable. This was true in most ‘mainstream’ property types, but the office space remained bifurcated between ‘haves,’ and ‘have nots,’ where a well-located asset with high-quality amenities, strong professional management, solid leasing activity, and qualified sponsorship was more likely to receive favorable financing terms, but ‘have not’ assets had little to no lender interest.

Agency lenders were highly active in multifamily, while life companies and banks maintained a steady presence in multifamily, industrial, and logistics. Alternative sectors such as self‑storage, student housing, medical office, and single‑family rentals also saw strong lender demand, with spreads tightening as competition increased. Data centers continued to attract significant capital, though some lenders remained cautious due to large loan sizes.

Selectivity remains a constant theme.  Overall office financing was challenging, and even in favored sectors, lenders were disciplined. CMBS was a bright spot, benefiting from steady execution and strong investor appetite for the bonds.

In 2026, we expect lending activity to continue improving. As yields compress, some lenders may widen their search for yield, but disciplined, selective underwriting is expected to persist.

How significant is the 2025–2026 maturity wall? Are distress levels rising? Do workouts, extensions, and restructurings remain the dominant strategy?

The 2025-2026 maturity wall is real, but it’s probably not as abrupt or dramatic as some of the headlines suggest. What we’ve really seen is that wall getting pushed out incrementally. as stronger, well‑located assets secure extensions or refinancing. Every time that happens, it takes a little pressure off. The real stress is showing up in the ‘have‑not’ assets where the capital stack just doesn’t pencil anymore. Those situations usually need a reset or a repositioning, and there’s no getting around some level of pain.

Distress is rising, but it’s been more of a steady grind than a spike. A lot of that showed up in 2025 and will continue into 2026, especially as lenders grow less willing to grant repeated short-term extensions. The trickiest situations are the in‑between assets, those that are still generating income today but are vulnerable to market shifts and occupancy changes.

Workouts, extensions, and restructurings are still dominant strategies. We’re also seeing more creative solutions—lenders restructuring the loan into a performing tranche and a future upside tranche, while allowing new equity to enter in the middle with a priority return ahead of the upside tranche. None of this is new cycle-wise, but it’s becoming more visible as lenders look to avoid taking on the responsibilities of real estate ownership while still working toward a resolution.

Are investors shifting strategies toward core, value-add, or opportunistic plays in 2026?

Investors aren’t making a dramatic move back to core as we head into 2026. What they’re doing is recalibrating risk. Core buyers, especially in office, are being very cautious. It’s tough to underwrite when one block is performing well and the next is struggling. That fragmentation makes it hard for institutions that aren’t deeply embedded in the market to feel confident. Combine that with the bid‑ask gap, where sellers don’t want to accept value‑add pricing, and core deals are slow to materialize.

As a result, a lot of investors are gravitating toward value-add and opportunistic strategies, where pricing better reflects uncertainty and there’s room to create upside. Logistics and data centers still attract core capital, but data centers in particular require massive scale and deep expertise, which narrows the buyer pool.

Ultimately, 2026 feels like a market where experience matters more than ever. The ability to identify true “have” assets and avoid the rest will drive strategy selection and performance.

What do you see as the top risks for commercial real estate capital markets next year?

One of the biggest risks going into this year isn’t so much the capital markets, but it’s execution at the asset level. Markets are increasingly hyper-localized and understanding what truly drives demand in a specific submarket – or even a specific node or corner – matters more than ever. You need to understand the submarket, the node, the literal corner. Without that level of insight, it’s tough for investors or lenders to tell the difference between assets that will outperform and those that simply look good on a spreadsheet. From a broader capital markets perspective, the usual macro risks are still out there.

What else can you add that might interest readers about capital markets in the coming year? How should readers prepare?

One thing that’s worth highlighting as we head into the coming year is the growing disconnect we’re seeing in risk-adjusted returns. In some of the most favored asset classes, lenders are competing at very low yields, and at a certain point, that math just stops making sense. That’s prompting a more thoughtful conversation about where you’re actually getting compensated for the risk you’re taking.

That shift is opening up opportunities in areas like value‑add lending, especially in sectors that have been out of favor. For the right assets, with the right sponsorship and underwriting, the pricing and yield dynamics are materially more attractive than what you see in core product today. If you know what you’re doing, there’s an opportunity to generate strong returns without taking disproportionate risk.

For readers, the best preparation is staying flexible and informed. This isn’t a market where you can apply broad strategies and hope for the best. The opportunity set is there, but it’s likely mispriced and time-bound, so moving thoughtfully and decisively will make all the difference.