EXPO: bright prospects for the US real estate market in 2026

The US real estate market is picking up again and prospects for 2026 are bright, delegates heard at the State of the US CRE Lending Market briefing, organised by the Real Estate Lenders Association, which took place yesterday at Real Asset Media´s International Investors Lounge. 

¨The markets are back and there´s a lot going on¨, said Darrell Gustafson, Managing Director, Commercial Real Estate Finance, Deutsche Bank US. ¨There might be a few landmines ahead but for the most part I would say the market has bottomed out. 2026 has the potential to be a record year for us.¨

Even the office market, which has seen the most distress in the post-Covid years, is showing positive signs, as banks and tech companies are mandating people back to work. Multi-family and hospitality are also doing well.

¨New York is the best office market, we are seeing a lot of leasing and financing activity¨, said Gustafson.

Lending activity has picked up and there seems to be an abundance of capital in the market.

¨The lending market is healthy again, and the commercial mortgage-backed securities market is likely to have a record year in 2025¨, said  George Durban, Managing Director, Real Estate Syndicated Finance, Wells Fargo. ¨We are seeing significant activity on the banking side, with $26 billion in commercial real estate loans so far and likely to reach $40 billion by year-end which is significant for us.¨

Transaction activity is picking up – the expectation is to reach $250 billion this year, which would represent a 10% increase on 2024 – but still not back to what it was.

¨Transaction volumes are not back to pre-Covid levels but they are getting better¨, said Helga Blum, Managing Director, Head of U.S. Real Estate Finance, BayernLB US. ¨We are hoping for two more interest rate cuts this year, which would help the industry a lot from day one. But there is optimism in the market and the belief that 2026 will be better than 2025.¨

High interest rates have acted as a dampener on construction, but that is changing now.

¨The low interest rates period was like a drug we all got hooked on, then the rapid hikes were a real shock to the system and values plummeted quickly¨, said Vikram Killampali, Senior Director, Real Estate Finance Syndications, Helaba US. ¨Now I am optimistic: 20% of our book is construction and we are planning to grow that allocation in the next year, as there is less competition. It is an asset class that will be heavily bid on.¨

Alternative lenders are very active in the construction space too and they see the demand particularly in the resi space.

¨We step in as alternative lenders where banks are not willing to, adding that incremental leverage that allows the borrowers to achieve their goals¨, said Dan Buehrens, Managing Director, Credit, Brookfield Asset Management. ¨We see a real lack of supply in residential, especially in New York.¨

There´s a lot of activity converting old empty offices into resi for rent, especially near stations and transport hubs.

¨Three out of five deals we do are office to resi conversions, especially in Manhattan and Washington DC¨, said Gustafson. ¨There is a lot of obsolete office space, as people now want floor-to-ceiling windows, big open plan spaces and so on, while we are seeing tremendous rental growth in New York resi. But it is not just about New York: every city in the US seems to have a housing shortage, so those opportunities will keep coming.¨