The TreppWire Podcast: A Commercial Real Estate Show
Episode 371: "Setting the Stage for 2026: Commercial Real Estate Outlook, Key Predictions & Market Resolutions"
Date: December 30, 2025
Host: Hailey Keen (Trepp)
Guests: Lonnie Hendry (Chief Product Officer), Steven Bushbaum (Research Director)
Episode Overview
In this milestone year-end episode, the TreppWire team draws on proprietary data and sector expertise to offer a nuanced forecast for commercial real estate in 2026. The central theme—Measured Momentum—frames a market that steered clear of extremes in 2025 and now faces a sorting year rather than a broad rebound. The panel analyzes expected winners and losers, structural shifts, property pricing dynamics, maturity schedules, and sector resilience, while wrapping up with actionable resolutions and predictions for the new year.
Key Discussion Points & Insights
1. The "Measured Momentum" Market Theme
- The market in 2025 avoided drastic swings and showed "selective, uneven progress" across office markets, refinancing, CMBS, property prices, and lending.
- Steven Bushbaum: "2026 is a sorting year, not a broad rebound. The winners and losers are going to look increasingly obvious as the year goes on." (01:16)
Memorable Quote:
“Properties with durable cash flow... Those deals will refinance, transact, and even start to see pricing stabilize or recover in pockets. But assets… fighting fundamentals... are going to keep running into friction.” — Steven Bushbaum (01:29)
2. Bifurcation: The Haves vs. The Have-Nots
- Ongoing separation between financeable properties (those with strong fundamentals) and challenged assets.
- Sponsors and lenders are eager to back “good” assets; others face workouts, defaults, or “jingle mail.”
- Private debt funds may become more aggressive, pursuing “loan to own” strategies.
- Increase in transaction volume is anticipated, including distressed sales and repositioning opportunities.
- Lonnie Hendry: "Even the have-nots, I think you’re going to see a lot more activity there, whether... handing the keys back or aggressive distressed buyers." (03:02)
3. Capital Deployment & Lender Behavior
- Refinance activity and transaction volume driven by capital that “needs to get put to work,” including bond buyers and life insurance portfolios (05:56).
- Competitive lending environment for quality properties, but discipline is required given ongoing uncertainties in rates and maturities.
4. Market Segmentation & Geographic Nuance
- Inflection points in big markets like LA and San Francisco, but caution for some secondary markets.
- AI-driven economic growth could reshape demand in certain secondary or overlooked markets.
- Expect ongoing preference for five-year over ten-year debt, but with risks if rates shift unexpectedly.
5. Debt Structure Trends
- Five-year debt remains popular, with pre-priced seven-year extension structures valued by large borrowers (10:24).
- Smaller borrowers have fewer hedging options; market may shift if the Fed’s leadership or macro environment changes.
6. Macro Headwinds & Retail Sector Risks
- Impacts of tariffs already visible (e.g., Jim Beam suspending production in Kentucky).
- Retail stress: major retailers like Saks Global may face bankruptcy, serving as a bellwether for the sector’s health (13:00).
- Steven Bushbaum: “Luxury side of retail... has been the biggest winner... so [Saks Global’s struggles] tells you just how challenging it still remains.” (13:44)
- Budget retailers (e.g., Walmart) outperforming, buoyed by physical infrastructure and innovation in logistics.
Notable Moment (Walmart discussion):
“If any Walmart C-suiters are out there listening... automate away some of those bottlenecks in that last hundred yards pickup.” — Steven Bushbaum (14:22)
7. CMBS Issuance & Market Predictions
CMBS Issuance
- Back-to-back years of $100B+ issuance; both Steven and Lonnie expect a “three-peat” in 2026, possibly exceeding $130B (19:25).
- Increased issuance driven by a confluence of maturing five and ten-year debt.
Bank Lending
- Predicted modest growth: 2.5–3% increase in lending volumes year-over-year, with more aggressive competition among banks (21:01).
CMBS Delinquencies
- Delinquency rate rose to 7.3% at year end.
- Maturity defaults are 80%+ of delinquent loans; expect rates to stay “range bound” or move “sideways” as resolutions and new delinquencies offset each other (23:02–24:46).
- Office sector highlighted as a possible problem area for upward pressure on delinquencies.
8. The "Maturity Wall" and Upcoming Supply
- Should be viewed as a “rolling maturity wall” rather than a one-time tidal wave (26:45).
- Elevated maturities expected through 2026–27, particularly troublesome for office, retail, and lodging sectors:
- “It's manageable for financeable assets, but stress is always lumpy in our space.” — Steven Bushbaum (26:45)
- Noted that social media exaggerates the risk; data shows market adapts over time.
9. Property Prices Outlook
- 2025 saw mostly flat prices; 2026 predicted to be up in the low single digits nationally, but wide sectoral and geographic variance likely (30:32).
- Quality assets to see stronger growth.
- Multifamily and industrial (esp. data centers) poised for “really strong value growth” in some markets.
- Example: Florida and Texas expected to benefit from tax migration; multifamily sector could see double-digit increases in some areas.
Quote:
“Repeat sales indices... as of third quarter 25 clocked in at a 2.89% year over year increase. I'm hoping we hit somewhere between 4 and 6% here throughout 2026.” — Steven Bushbaum (33:35)
10. Political and Local Market Wildcards
- Example: Potential daycare fraud scandal in Minnesota could abruptly impact local commercial markets.
- “If that's all a bogus sham that could materially negatively impact that local economy. I mean overnight.” — Lonnie Hendry (35:57)
Resolutions & Recommendations for 2026
1. Resolution #1: Capital Structure Discipline
- Emphasize thoughtful leverage and hedging, prepare for higher-for-longer interest rates, and avoid overreaching for yield.
“I think the number one thing... has to be capital structure and discipline.” — Lonnie Hendry (36:53)
2. Resolution #2: Proactive Refinancing
- Urge sponsors to refinance “early and not heroically”—lock in today’s rates rather than gamble for marginal gains.
“I would like to see the market refinance early and not heroically.” — Steven Bushbaum (37:43)
3. Resolution #3: Go Beyond Headlines
- Headlines oversimplify market complexity; dig into data, context, and the nuances of local and sector-specific trends.
"Headlines are only half the story... in 2026, dig a little deeper, get to the data...” — Lonnie Hendry (38:20)
4. Resolution #4: Data-Driven Decision-Making
- Make analytical rigor and reliance on hard statistics a habit for all market participants.
“Make data driven decisions a habit. And that's what we here at TREP are here to help you with.” — Steven Bushbaum (39:40)
5. Resolution #5: Share Stories and Lessons
- Encourage more transparent industry storytelling, sharing both wins and losses for communal learning.
Notable Quotes & Memorable Moments
- “The gap widens between financeable real estate and everything else.” — Steven Bushbaum (01:22)
- “...At this point, you've still had some extension modification... maybe 2026 you start seeing those properties fall off.” — Lonnie Hendry (03:04)
- “Capital has to get deployed... the bond buyers, the life insurance portfolios, money has to get put to work.” — Steven Bushbaum (05:56)
- “If longer end rates become unanchored... that's definitely going to push toward the bear steepener scenario..." — Steven Bushbaum (08:12)
- “Disciplined approach has to persist... discipline is going to win the day.” — Lonnie Hendry (36:53)
- “Hope is not a strategy.” — Lonnie Hendry (38:20)
Timestamps for Key Segments
- 01:16 – Major prediction for CRE in 2026
- 03:02 – Bifurcation: Haves vs. have-nots discussion
- 05:56 – Capital deployment and transaction outlook
- 10:24 – Five-year vs. ten-year debt preferences
- 13:44 – Retail sector stress, Walmart as a disruptor
- 19:25 – CMBS issuance predictions for 2026
- 21:01 – Bank lending forecast
- 23:02 – CMBS delinquencies explained
- 26:45 – "Maturity wall" reframed and discussed
- 30:32 – Property price outlook for 2026
- 36:53 – 2026 resolutions for CRE market
- 39:40 – Data-driven decision making
Conclusion & Further Resources
The episode wraps with programming notes, a rundown of notable 2025 guests, and a reminder about industry events and upcoming content. The TreppWire team reiterates their focus on delivering context, clarity, and actionable insight—inviting listeners to remain engaged and informed in 2026.
For more insights, subscribe to the TreppWire Podcast and check out the forthcoming Year-End Magazine, available at the CREFC Miami Conference and online.