Bisnow Real Estate Market Trends

The headlines suggest recovery, but the data points to a slow reset. According to Emerging Trends in Real Estate 2025, inflation is expected to rise over the next five years. Over 70 percent of respondents believe commercial mortgage rates will stay flat or increase. Capital markets may have stabilized, but financing pressure remains high. Many owners face difficult refinancing decisions ahead. Cap rates are expected to climb further. Office values are already down over 35 percent. Multifamily and industrial are showing weakness as well. Return expectations are rising, not because of rent growth, but because pricing is falling. For Family Offices, this creates a clear opening. Forced sales, stalled refinancings, and repricing across sectors are producing actionable opportunities. These are not short-term flips. These are long-term positions built on strong basis and cash-flow resilience. This is when patient capital performs best. The Family Offices prepared to underwrite, move quickly, and structure for income will shape the next real estate cycle. We are not in a rebound. We are in a recalibration. And those who act now will control assets others are still waiting to price.

The $70,000,000,000,000 (trillion) real estate market is entering a pivotal phase in the next 12 months. Here are 5 trends worth watching: 1. Loan maturities are creating a second wave of distress • Roughly $900B in CRE debt matures in 2025–2026. • Many of the loans were underwritten at 3-4% rates. • Now they’re rolling into 6–7% debt.  ↳ Expect more forced equity infusions. ↳ Expect more recapitalizations. ↳ Expect more note sales. 2. Transaction volume is slowly thawing • After a historic freeze,  ↳ Q2 2025 multifamily sales rose ~39% YoY. • Bid-ask spreads are narrowing as sellers adjust. • More “price discovery” deals are clearing the market.  ↳ Early signs that liquidity is returning. 3. Insurance costs are reshaping asset viability • Premiums are up 30–50% YoY in select markets. • Some deals no longer pencil because opex kills yield. • There's a real redirecting of capital to inland MSAs.  • As investors invest in “climate-resilient” metros. 4. Capex and renovation costs are stabilizing • Materials inflation is moderating after 3 volatile years. • Labor availability is improving. • For value-add operators,  ↳ underwriting is becoming more predictable. 5. Secondary markets are outpacing gateways • Nashville, Raleigh, and SLC are leading in rent growth. • While, NYC & SF are seeing negative net absorption. • The “capital migration” story remains intact. BONUS: 6. Private credit is becoming the bridge lender of choice • Regional banks are shrinking CRE exposure. • Debt funds and private lenders are stepping in. • Expect higher coupons  ↳ but also faster execution & more creative structures. P.S. What trends are you watching most closely as we head into 2026?

Bisnow “Phoenix State of the Market” this morning featured three all-star #development panels and a warm & welcoming introduction by Mayor Kate Gallego! I was so happy to cheer on my friends Joshua Simon SimonCRE, Thomas Maynard, Darryn Jones & see so many awesome people! Takeaways: ·        The main challenges in the Phoenix market are serious, but shared nationally: workforce/talent, housing affordability; and power/utilities. ·        There IS a future for #office; it just needs to offer “more than a cube and a phone.” Creative, cool spaces with state-of-the-art amenities are leading the charge. The Phoenix market return-to-office was stronger than anywhere else! Does geography matter? “If you do it well and right, the geography doesn’t matter.” ·        Retail growth (like most sectors in Phoenix) is strong, but as the only product that provides sales tax to cities, it was mentioned that it’s curious that cities are so limited from incentivizing it. Agreed! With lease rates affordable to mostly anchor/national retailers, mom and pops are getting boxed out.  There’s a huge pipeline of grocery retail: 4 Targets are in development.* (*There’s new one coming to Surprise at Prasada!). ·        There is plenty of multifamily development in the Phoenix pipeline, however this all likely started a couple of years ago. Earlier stage multifamily development projects pulled back this year, & this lag could impact supplies in 2026 and 2027. ·        Insurance rates are up in competitor states Texas and Florida, making Arizona an even more attractive value proposition for commercial & residential projects. ·        Phoenix offers best practices in adaptive reuse projects! Redevelopment offers a huge revitalization opportunity for cities, & there are tax credits and capital available with the right vision, flexibility, city advocacy and partnerships. ·        Industrial is seeing a resurgence of owner-users, represents about 80% of deal flow that the Greater Phoenix Economic Council is seeing. ·        There is a “glimmer of hope” for Class A office growth, however Class B office might be an unsung hero of the Phoenix office market, offering the smaller businesses a convenient, lower-cost opportunity. ·        Healthcare is “chugging along;” seeing strong absorption in medical office. ·        Data centers are willing to look where they haven’t previously, with the West Valley as an example. The issue is power capacity. ·        Pharma and biotech are opportunities, given the US reliance on Asia for current pharmaceutical manufacturing. Great job to speakers: Chris Loeffler, Terry Goddard, Lorenzo (Lawrence) Perez, Renee Blakley, Brian Cassidy, Diego G. Ahumada, Ken McElroy, Mark Seale, Jeff Moloznik, Stirling Pascal, Adam Finkel, CCIM, Stan Johnson; Chuck Carefoot, Julie Cornelius, David J. Hrizak, Michael Krentz, AIA, LEED AP, Tonya Lively; nice to see: Kendra Hoffman, AZED Pro, Jon Gardikis, Adam Shipley, Jennifer Stein!

The longevity trend is gaining traction in multifamily developments, and commercial office spaces are next—yet many landlords are unprepared. A recent Bisnow article highlights how residential developers in South Florida are integrating longevity clinics, IV therapy, functional medicine practices, and lifestyle coaches into their buildings. The message has evolved beyond luxury; it’s now about living longer in these spaces. Hotels have led the way in wellness programming focused on sleep, movement, mindfulness, and recovery. Multifamily developers have taken note, adapted, and are elevating their offerings. Commercial office spaces are on a similar path, albeit at a slower pace. Post-pandemic, competitive Class A landlords have realized that tenants renew leases not because of lobby finishes, but because their employees want to be in the building. This is a wellness narrative and a human experience story. The multifamily longevity trend emphasizes that amenities should focus on the well-being of the people inside the buildings, rather than just the physical features. The top-performing office buildings in cities like Chicago, New York, San Francisco, and Toronto are not merely increasing amenity space; they are understanding their tenants' values and creating programming that aligns with those insights. Medical-grade wellness in residential towers and well-designed fitness and recovery suites in office buildings address the same challenge: making occupants feel valued. However, a gap remains in commercial office spaces. Many landlords still view wellness as a checkbox or a budget item rather than a core philosophy. They continue to build gyms without fully grasping how their tenants’ wellness and fitness routines have evolved, missing the opportunity to cultivate a supportive culture. Multifamily developers are measuring resident health outcomes at move-in and tracking them annually. Imagine applying that level of intentionality to tenant engagement in office buildings. The data could revolutionize how landlords approach lease renewals. As the distinction between living and working spaces blurs, the expectations for both have risen significantly.

One Property: $100K Per Door in 2021, $25K Today—This Is What Collapse Looks Like Bisnow’s latest report on Houston multifamily puts numbers to what’s already clear on the ground. Class A and B properties are trading again as prices reset and capital flows back in. But the Class C story is far darker. Syndicators bought C assets at pandemic-era cap rates with floating debt, counting on endless rent growth. Instead, rates jumped, rents stalled, and lenders have been extending and pretending . The results so far… • $400 million in Houston multifamily notes filed for September’s foreclosure auction • Properties once priced at $100,000 a door now trading at $25,000 • Occupancies sinking as low as 20 percent Many of these properties are basically obsolete, with no equity left for repairs. Lenders don’t want to take the hit, but they can’t keep deferring reality. Institutional capital won’t touch C at any price, leaving fewer buyers just as supply is about to surge. If you’re holding Class C in Houston, time is short. The day of reckoning is coming. For lenders, better to sell first than last. For investors, Class B looks like the middle ground—not distressed enough to collapse, but cheap enough to make sense. Cycles reveal fragility. Houston’s A and B are bending. C is breaking. https://lnkd.in/eHhbm_yY

Bisnow reporter Ryan Wangman recently covered the seven real estate stories Bisnow focused on throughout 2025. I was fortunate to be asked to weigh in on three of them and share my perspective: - Chicago’s Mega-Projects: The article quotes my view that “a lot of the mega-projects have momentum, which ultimately helps the Loop and downtown as a whole.” We’ve seen meaningful progress at The 78, Quantum Shore Chicago, Lincoln Yards, and O’Hare Airport, a project that is too often overlooked when discussing the city’s most critical mega-developments for both Chicago and the broader region. - Residential Housing: Throughout 2025, I’ve written and spoken frequently about the lack of multifamily housing construction in Chicago., both in the 1–4 unit segment and in large-scale residential towers with 100+ units. While this supply shortage has driven rent growth above the national average and created upside for developers and investors, it is not a sustainable economic growth path for our city. As I noted in the article: “We are entering a significant housing crisis. This crisis could diminish one of Chicago’s biggest competitive advantages for talent: affordable housing.” - Capital Investment in Chicago We still haven’t done enough to overcome the hesitation many capital investors feel about positioning Chicago as an attractive place to invest. Concerns around the city’s financial outlook, regulatory complexity, and the time required to secure approvals and permits remain real obstacles. Ryan accurately captured my sentiment: “The city is on the right track with its cut-the-tape initiative and needs to create a more predictable property tax system to bring in additional investment.” He also quoted me directly: “We, the business leaders, as well as the elected officials, have to court the capital markets much more aggressively. We have to listen.” I’m confident these three real estate dynamics will remain center stage again in 2026. Read the complete article here: https://lnkd.in/gfA-kYgp

Key takeaways from today's BISNOW's Boston State of the Market: Housing Shortage: A persistent issue, exacerbated by increased demand and stringent development regulations. Office Market Transformation: The potential for office-to-residential conversions is significant, but challenges like cost and regulatory hurdles remain. Capital Market Dynamics: Banks are becoming more cautious, while alternative lenders are gaining prominence. Easing regulations may bring traditional lenders back into the market. Regulatory Impact: Increased linkage fees and stricter energy codes add complexity to development projects. As we navigate this complex landscape, innovative solutions and collaboration between developers, investors, and policymakers will be crucial to drive sustainable growth and address the pressing needs of our communities. #realestate #boston #development #capitalmarkets #housing #office Bisnow Frank Petz #CRE #colliers