← The TreppWire Podcast: A Commercial Real Estate Show
The TreppWire Podcast: A Commercial Real Estate Show
371. Setting the Stage for 2026: Commercial Real Estate Outlook, Key Predictions & Market Resolutions
00:48:28
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- [00:00]
Steven Bushbaum
Foreign.
- [00:06]
Hailey Keen
Welcome to the Tripwire Podcast, the show where commercial real estate meets data and insights. This is our week in review for the week ending January 2, 2026. I'm Hailey Keen with TREP, a data modeling and analytics firm for the CMBS commercial real estate and CLO markets. I'm with Lonnie Hendry, Chief Product Officer, and Steven Bushbaum, Research Director. This week, on our final episode of 2025, we're looking ahead to what 2026 may hold for commercial real estate as we walk through the team's predictions and outlook for the year ahead in our Year End magazine. This year, our theme is Measured Momentum. This was our way of framing a year where commercial real estate avoided extremes and instead showed selective, uneven progress across office markets, refinancing activity, CMBS performance, property prices, and lender behavior. We'll also dig into some CMBS specific trends and loan level dynamics, including issuance, delinquencies and maturities that will help set the stage for 2026. So Stephen, as you think about the year ahead, are you ready to make some big calls for CRE in 2026?
- [01:16]
Steven Bushbaum
Ooh, that's a tricky one. If I had to make one big call for 2026, it's that commercial real estate is going to stay here in this measured momentum lane, but the market is going to get a lot more selective about who gets to participate in the upside. And what I mean by that is 2026 feels like a year where the gap widens between financeable real estate and everything else. Properties with durable cash flow that is strong sponsorship, a realistic basis, healthy tenant demand, and manageable near term capital needs. Those deals will refinance, transact and even start to see pricing stabilize or recover in pockets. But assets that are still fighting fundamentals or have a big capital stack problem, those are going to keep running into friction. And that's where you'll see workouts, extensions with strings attached, and in some cases, and in some cases jingle mail, the borrowers will just simply hand over the keys because that is truly the simplest, most straightforward outcome. So the headline for me is more resolution but not necessarily less stress. You'll see more maturities actually get dealt with either through refinancing, modification or liquidation. And that will create clearer price discovery, but it won't be evenly distributed across property types or markets. And for CMBS specifically, that selectivity shows up in the loan level story. Which borrowers can bring fresh equity, which assets can support today's debt service, and which deals are still stuck between yesterday's rates and today's realities. So that's my big call. 2026 is a sorting year, not a broad rebound. And the winners and losers are going to look increasingly obvious as the year goes on.
- [03:02]
Lonnie Hendry
And I don't disagree with you, Steven. I would contend though that that's effectively just a continuation of 2025. I mean I think we started seeing this play out this year and we've, we've talked about it, we've written about it. Of this bifurcation of the haves and the have nots, I agree with you. I think in 26 maybe the becomes more clear or the markets become more divided in the sense that at this point you've still had some extension modification, there's been some blurred gray area where properties maybe are holding on to hope and then maybe 2026, you start seeing those properties fall off. But I don't disagree. I think 26 will continue this evolution of the, the haves. And I think people will be very eager to work with the haves, whether it be sponsors, borrowers, you know, well located properties with good tenant mix, as you mentioned, have strong cash flow. I think they're going to have a very competitive lending market to enter into because people want to make loans on good properties. I think for the others it's going to be a little bit more challenging. And I think potentially this private debt market that has really kind of bolstered or buoyed the have not properties, you start seeing them be a lot more aggressive or taking action on some of those loan to own strategies where the operators are not able to fully meet the obligations. And so you start seeing some of these players get more active on the operation side and take some of these properties. And so I think we're going to see a really strong year in terms of transaction volume. So I would position it as even the have nots, I think you're going to see a lot more activity there. Whether as you mentioned, handing the keys back or some of these other more aggressive distressed buyers coming in and trying to reposition some of these assets. It's, you know, if we look at 2025 kind of year in review, the number that jumps off the PA page at me is the CRE Cielo issuance. And if you look back the last couple of years we hovered around 8.7, 8.6 billion. This year we're 30 plus billion. That gives me some optimism. I know a lot of that was clo to clo or bridge to bridge, but it makes me feel like people are starting to see some Upside potential in some of these, you know, reposition or story loan properties. So, you know, I think 26 is going to be a really banner year, all things considered. I think that you're finally going to see some of these people that need to take losses. Take losses, then that should break the logjam. And I think if that happens, Stephen, I don't know what your thoughts are, but if that happens, you know, some of these properties that are, you know, living in this, I think what you called it with the yesterday's rates and today's reality, you know, what we got to get rid of are the yesterday rates, properties that are non refinanceable in today's environment. And if you can do that through reset and basis and people taking the loss, that argument of not being able to refine today's rates goes away. And I think the reality is the higher for longer is here and the market has adjusted.
- [05:56]
Steven Bushbaum
Yeah, I mean when you look at where delinquency rates and special servicing rates currently sit and then combine that with the volume of maturities that we're looking at in 2026, I mean both banks and CMBS have a fairly sizable amount of debt coming due in 2026. So I mean it's going to be an active year on one end or the other, whether that's dealing with the distress or refinancing debt that's coming due. So I'm with you. I mean this is ultimately a very good thing because what we saw throughout 2025 is that capital has to get deployed, right? The bond buyers, the life insurance portfolios, money has to get put to work.
- [06:39]
Lonnie Hendry
Right.
- [06:40]
Steven Bushbaum
And to a certain extent it has to be aggressive for those good deals. And at some point there typically is a bit of a trickle down effect to those more mid market deals. So I'm excited to see what kind of volume we end up with at year end 2026. And that's going to be one of the things we'll talk about later in the show.
- [06:58]
Lonnie Hendry
Yeah, I mean we highlighted a little bit last week and we looked at L A and we looked at San Francisco and we looked at a couple of these markets. You know, do you think we're at an inflection point with some of those markets where people maybe this may be contrary to what we just said, but people maybe are willing to go a little bit more aggressive in those traditionally strong markets even with a property that's maybe a little bit iffy versus really strong properties. But in these secondary markets where it feels like maybe they've run out of steam a little bit.
- [07:27]
Steven Bushbaum
You know, it's, it's really hard to say. And I say that only because if you think about where the AI demand shift is breaking into, right. Some of those jobs that are going to be created with these kind of future industry needs are in some of those secondary markets. So it'll be very, very market selective. I think there's a lot of opportunity in markets that have traditionally been overlooked or not given a lot of love. But at the same time there'll be other secondary markets that you just shake your head at, head at and say I don't know, I just, I don't see the math working over the next decade. Now that being said, I also don't think you're going to maybe see a ton of 10 year debt either. I think the preference continues to be toward that five year note even though I personally still think that's a risky play. It'll be interesting to see how that 5 and 10 year debt mixture shifts as the year goes on. Because right now with the Fed chair going to be replaced mid year, I don't think that's going to happen early. I don't personally, my own view is that I don't see Powell stepping down early because he's too much of a proponent of an independent Fed. And so hopefully he'll hold the line because I think that's important for long rates to stay where they are. But if if longer end rates become unanchored and maybe push toward the higher end of the range because there start being risks about the US deficit, Fed independence, et cetera, et cetera, that's definitely going to push toward the bear steepener scenario where long rates increase more than short rates and shift that preference back to, you know, five year debt. But if 10 year debt continues to be priced attractively, I think at some point you got to ask yourself, does it make sense to just go ahead and pull the trigger on that maybe seemingly expensive 10 year debt relative to the last 15 years? Because it could be even more expensive 10 years down the road?
- [09:19]
Lonnie Hendry
Yeah, I think that that's going to be something we keep our eye on. I mean, I think if you were looking back at this, this part of the cycle to date, that's been one very clear, you know, demonstrated move across the spectrum is everyone wants the five year paper. And whether that can continue to persist will be very interesting for the reasons you mentioned. I think my gut tells me that yes, people will take their bets, they'll do the five year hoping and praying for you know, lower rates later on down the road. But for the reasons you mentioned, there may be some challenges to that just with, with way things are going to play out in 2026 and it's, you know, that's, that's kind of a, a nuanced part of the market that maybe hasn't got enough attention is just a lot of these transactions are kind of betting on lower rates in the quasi near future. And if that doesn't happen, are we just, you know, maybe not to the same extreme obviously because we're not in a zero interest rate environment now. And so you're not going from three to seven. But are they setting themselves up for a very similar outcome to what we have today if rates go up, call it 100 or 200 basis points in the next five years.
- [10:24]
Steven Bushbaum
Yeah, I mean one structure that I like and the structure really probably only works for those larger loans like the SASB deals. But right now, depending on how the forward curve is priced and how the volatility ultimately is looking in the long to the curve, I like those cheaper 5 year notes with pre priced like 7 year extensions. So you get some maybe lower cost long term debt optionality on the long end. But those sort of debt structures typically are not going to be available for your $25 million loan.
- [10:58]
Lonnie Hendry
Yeah, I agree with you. I think you're going to see a lot of people that can hedge in that form. But to your point, it's not available for everyone. As we kind of round out the year and we look forward. It's interesting, you know, some of the macro headlines that we've covered this year. I mean obviously the FOMC meetings the last couple of months have like really driven the narrative around kind of where we're at. I think December upcoming minutes, you know, provide insight into the, just the general consensus or lack of consensus around where the committee thinks the market is. I mean it's, it's really interesting. We've gone from inflation by itself kind of being the primary target with a very distant dual mandate component of labor markets. And then now you're seeing both of these things front and center. I think that continues into 2026. You know, we're starting to see some of the implications for some of these tariffs even I don't know if you saw, but Jim Beam has reported that they're halting production and its main Kentucky distillery which they're referencing back to, you know, tariffs impacting their, their ability to profitably continue to produce their product. And you know, while on the whole that's not that big of a deal, but for that local economy, really significant. So now you have somebody like Jim Beam that's a large employer in that regional market that's now going to pull back and we'll see if that has ripple effects or if there are other, you know, distillery folks that are going to follow suit or how that plays itself out. But we're finally starting to see some of these tariff related impacts maybe trickle through. And I think obviously 2026 is set up to see more of that. Supposing that, that there are others, which I would assume there are. And then I think the last thing I wanted to kind of highlight here is just, you know, the financial stress at major retailers. And you mentioned this a little bit last week when you talked about the report you read that highlighted how many retailers were going to go out of business. And it's, you know, I kind of pushed it to the side a little because I think sometimes those numbers get a little bit inflated and I think for every one closing you have some component of a new expansion plan or whatever. But you know, here's a pretty significant one where, you know, Saks Global has a really large debt payment due at the end of the month and Chapter 11 is being floated around as a possibility. You know, it's interesting. They, they're over levered, they acquired Neiman Marcus. You know, there's been a lot of ups and downs with luxury spending over the last couple of years and so this could be kind of a bellwether on just where that retail sector kind of kicks off. 2026, is it going to be another, you know, I'm not going to call it apocalypse, but is it going to be another challenging market for some of these big name retailers compared to what we've seen the last couple of years?
- [13:44]
Steven Bushbaum
Yeah, this is an unfortunate one because the luxury side of retail is the one that generally has been the biggest winner throughout the past 12 to 18 months. So to see this household's banner name retailer struggling when that's the section when that's the particular sector of the market that has outperformed tells you just how challenging it still remains across the retail spectrum. But you know, in fairness, I think you've seen anyway, you've seen the budget end do generally very well this past year. I mean Walmart, heck, they've been killing it though I gotta say, just on a personal note, I did visit a Walmart over the holidays and I gotta tell you, I'm never doing pickup ever again from them. It was terrible. It was absolutely terrible. I waited 40 minutes in the parking lot. So I would say with all the innovation that Walmart's done, if any Walmart C suiters are out there listening, I gotta tell you, if you want to continue to see gains, I would do some automation in your pickup kind of last hundred yards delivery logistics. Right. If you can automate away some of those bottlenecks in that last hundred yards pickup deliver, gosh, that would go a long way I think toward Walmart's bottom line.
- [14:59]
Lonnie Hendry
I think that's a feature, not a bug. Stephen. They don't want you coming to do pickup. That, that's legacy remnant of COVID They want you paying for the membership and they want you getting home delivery. I mean that's the deal. And so as someone that gets the Walmart home delivery, I'm a huge fan, man. Like they just drop it off at the front door, I, I think and I'm seeing more and more of these dedicated Walmart delivery trucks on the road. This wasn't something we had planned to discuss today, but I think Walmart challenges Amazon directly in the next couple of years on all of the E commerce stuff. I mean they are well positioned, they have a bigger, broader, more connected network of physical real assets in every market across the US for that last mile distribution. If they can somehow convert some of their retail storefront to some sort of distribution component. I think Walmart challenges Amazon directly. I mean they're, they were first to market with the drone delivery. They've, I've had drone delivery in my market for the last year. Plus I know Amazon is finally rolling that out at scale. But I'm with you. I think Walmart on the whole is, is set themselves up to be cutting edge, which is just really interesting. Like they've, they were such a pioneer back in the day that became a legacy brand. But if you look at them, Kmart was a competitor effectively. Sears at some level was like Montgomery Ward service merch. Like all these, these legacy retailers, they didn't make it. Walmart has innovated at a level at least that they were able to survive. But I think now we've talked about it on the show where they're partnering up with OpenAI and they're doing some of these things with the drone delivery. I'm pretty bullish on Walmart. I haven't done the pickup, the store pickup in a long time sucks. You had a crappy experience with that. But I think, I think Walmart's something to be, to be watching because they, they've Propelled themselves. I mean if three or four years ago Target was kind of leading, everyone was like, everyone wanted to go to Target. You haven't heard a positive Target story in a very long time.
- [16:59]
Steven Bushbaum
Yeah, I mean if you think about, you know, physical warehouse footprint and count, Walmart inherently has a last 1 to 3 mile delivery cost advantage relative to Amazon. Right. Amazon has bet on larger scale, so that means fewer warehouses and that's going to bump up their transportation cost and importantly bump up their, or at least place some lower limits on their delivery timeline. Whereas Walmart inherently has a lower transportation cost and a speedier delivery advantage. So in a world that cares a lot about delivery time, Walmart seems well positioned to win that game.
- [17:36]
Lonnie Hendry
Yeah, I agree with you. And they, and they own a lot of different components of that. I mean they're, they have a well established trucking fleet. They have, they have the ability to get freight moved across the US at scale that's pretty much unrivaled except for maybe by, by Amazon. You know, Walmart owns a lot of their real estate too. They do a lot of their own development. It'll be interesting to see how that plays itself out. Obviously you haven't considered them competitors over the last five to 10 years, but I think you're increasingly going to see them. Have you seen those, the new electric Amazon delivery vans?
- [18:06]
Steven Bushbaum
You know, I don't know if I have or not. I've seen the USPS ones, but I don't know that I've seen the new Amazon ones.
- [18:12]
Lonnie Hendry
So they have these all electric fleet now, at least where I'm at. And the wheelbases on those things are the most awkward looking thing I've ever seen. Like the back wheels are effectively under the back bumper. Like they look super awkward. They have these really large round headlights in the front that make them look like they're some sort of a talking van. It's, I don't know, it's like a movie scene. And these guys just drive those bad boys around all day every day. I mean I, I would be nervous to get inside of one. They just don't look that great. But they're, they're all over the road. Maybe Hayley can get us, can get this show steered back on the road.
- [18:52]
Steven Bushbaum
Oh, good one.
- [18:54]
Hailey Keen
So you guys have kind of been giving us predictions all year. It's, it's a good thing. You're always giving us the outlook, what you expect. But maybe we can do just a quick rapid fire round of predictions for our listeners here. And I think we could start on A topic we've been talking about for months and months and that is that we saw over $100 billion in CMBS issuance this year and last year. So we had back to back years of $100 billion issuance. Are we going to see a three peat in 2026?
- [19:26]
Steven Bushbaum
I think so. I think we could easily pass the $130 billion mark. If you look at how much debt we have coming due in C, combine that with bank space and the broader market overall. Unless broader markets, macro markets throw us some dramatic curveball, which I think is possible. But under the base case scenario, yeah, I think we see a three peat.
- [19:51]
Lonnie Hendry
Yeah, I'm supportive of a three peat. I wish we had the Chicago Bulls pregame song playing in the background because that would only be appropriate when we talk about three peats. But yeah, everything's set up to see a continuation of what we've experienced in 2025. And I think to Steven's point, base case has to be at or slightly above where we ended this year. I think if you just look at the maturing debt load and you look at some of the positive fundamentals in some of these markets we highlighted, I'm pretty bullish on seeing, you know, 130ish billion issuance in 2026.
- [20:27]
Steven Bushbaum
Yeah. And I just want to remind our listeners when you saw the five year debt come into vogue, we're right now entering the window of when some of those loans are going to start coming due. So we're basically compounding the ten year debt that's coming due plus this new five year wave. So we're going to see basically a compression of that maturity trend.
- [20:47]
Hailey Keen
You referenced banks in that answer, Steven. So let's stick on that. Let's talk about bank lending. We saw lending to commercial real estate accelerate in the last part of 2025. Where do you see it going in 2026?
- [21:01]
Steven Bushbaum
You know, I'm positive on the banking sector but I still recognize that there are some hurdles, some issues that have to be worked through. So I'm calling for a modest 2 and a half to 3% increase with possibility of some upside potential here. But the base case is for right about a 2 and a half, 3% gain on a year over year basis on, on lending volumes.
- [21:25]
Lonnie Hendry
Yeah, I'm, I'm similar. I think you're going to see about a 3% gain on overall bank issuance and I think you start seeing banks get a lot more competitive and being a lot more aggressive with the structure and trying to win deals, which is Good. I mean, we need them to be a vital, integral part of the marketplace. And I know for a while they had to be pencils down and there was some additional scrutiny. I think the fear of overregulation and some of the things that were holding them back have abated. And I think you see banks come back with a pretty strong 2026.
- [21:58]
Hailey Keen
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- [23:02]
Steven Bushbaum
Well, the funny thing with delinquencies is typically we're more focused on the overall percent. But remember, you have two components to a ratio. You have the numerator and the denominator. So the denominator, fortunately for us, has been growing because we've had so much issuance. And so that's helped put some downward pressure on the delinquency rate at times. But at the same time, we've continued to see matur stress work its way into the numerator as loans hitting the maturity default. Maturity defaults make up an overwhelming majority of the delinquency numerator right now. So that's the dollar amount of delinquent loans in the CMBS universe. I think it's well over 80% at this point. And so ultimately for 2026, what could we see? I think it's a number that moves more or less sideways. We could easily continue to see a growth in the dollar volume of delinquent loans. But we should also start to see some of those long outstanding delinquencies get resolved, either through liquidation from the universe or through modifications. So it'll, it'll ultimately come down to the tug of war between the numerator and denominator effect, how much of an increase ultimately we see in net new delinquencies and how much will issuance continue to add to the denominator? Because we just had a very healthy year. So it takes six months before a deal enters our delinquency, our compendium universe. So that's the denominator, the universe of all CMBS loans outstanding. It doesn't make sense to put every single new issue deal in the denominator all at once because ultimately a loan is not going to become delinquent one month after it gets originated. So you have this six month lagging effect on originations. So I think ultimately we move sideways throughout the year.
- [24:46]
Lonnie Hendry
I think I would go with a range bound prediction. I think we hover at or within 100 basis points of where we are on the high side for 2026 for some of the reasons that you mentioned, Stephen, I, I think there's still more distress to play itself out. I don't think we're in the clear here yet. I think there's going to be more loans go delinquent, I think there's going to be more maturing loans that don't refinance. And so I think you're going to have, you know, you might see an increasing delinquency rate through 2026. I think we've gotten the majority of the delinquency kind of factored in. So I don't think you're going to see huge sw. You know, my gut just feels like the Office is, has not ever reached the full peak, like for whatever reason, whether it be creative workouts or extensions or modifications or other things that have allowed Office to continue to hover around that 11% range. It just feels like there's more distress than what the numbers reporting on the office side. So I, I may be a little more bearish on the have not office sector and I think you could see a pretty significant increase there. Although my prediction for 2025 was 1518, we never got anywhere close to that. So I'm not as bearish as I was. But I think you could see some pretty significant uplift in the delinquency number on the Office side. I think on the overall range bound by 100 basis points. And I think at some point as we talked about on the lead and Stephen, when you start seeing some of these properties transact, that should bode well for delinquency. So you might end the year at some level in a much stronger position than where we start the year.
- [26:30]
Hailey Keen
So let's talk the dreaded or loved theme of the maturity wave. The maturity schedule. What are we seeing in maturities and what would you expect to see in 2026?
- [26:45]
Steven Bushbaum
Personally, I think this current landscape is best described as a rolling maturity wall rather than a one time wave like you keep seeing blasted across social media. This is really like a rolling issue. And I think as we mentioned earlier, maturities are slated to stay elevated throughout 26 and 27. It's manageable for financable assets, but stress is always lumpy in our space. And that continues to especially be the case when that wall overlaps with say some of these less loved office or retail or lodging exposures. Those are the sectors where you've seen some very large changes in the month over month delinquency rates, especially with some of those five year loans that were underwritten near peak. Remember that 2021 was that peak of optimism where you had rent growth that was passive. We hadn't yet begun to think about the rising inflation and higher rates. So for me it's going to be really interesting to see how this 2021 five year cohort performs as we go through 26 and 27.
- [27:56]
Lonnie Hendry
Yeah, I think we've passed the point of people worrying about a maturity wave or the maybe more palatable maturity schedule or whatever. And to your point, Stephen, on the delinquency where you just said it's a ratio at some level, that's all we're talking about here. And you know, you have to balance the fact that the reason there's additional maturities in some of these years is there was outsized origination volume in some of those years that preceded them. And so some of this is a natural part of the cycle. Obviously you've added or compounded some by extending or modifying some of these troubled loans. But I think we've talked about that. That's like its own category. Those are, those are not part of the, you know, those by themselves are kind of cornered off or sequestered where people know those are distressed loans. So I think on the whole, listen, I think we're past the point of people worrying about a maturity wall. This is a second or third time I think in my professional career where we've had this huge run up in what people call a maturity wall. And in both instances the markets have just evolved to handle them. And I think we've seen it play out, this latest disruption. And I don't foresee any type of huge issues in 2026 elevated. You can call them higher, you can say there's frame you want, but the reality is the market has dealt with them and the market's in a much stronger position. I think sentiment around cre understanding of how deep the distress goes in which sectors and which markets. People are a lot more educated on kind of where we are relative to where they were two and a half years ago. And so at this point I don't think this is, this is a challenge for us in this year's upcoming maturity cycle.
- [29:38]
Steven Bushbaum
Yeah, I just want to give a quick plug for our Year end magazine that we have slated to come out here fairly soon in the front section of that year end 2025 magazine. We have a piece on payoff rates in CMBS. So for anybody that wants to get a more granular understanding of how loans have performed that have reached their maturity date and remain outstanding, that piece will give you the stats that you want and ultimately need to know to fully understand this story because the social media headlines really paint a distorted picture. We'll give you the hard stats in that Year End magazine.
- [30:21]
Hailey Keen
And lastly, talk to me about property prices. We saw prices stay largely flat through 2025. Where do they end up in 2026?
- [30:32]
Steven Bushbaum
I think we'll end up modestly higher Overall. I pegged 2026. All property price index is up in the low single digits as you continue to see cap rates maybe gradually ease and capital markets Momentum improves after 2025 that was more or less steady, flattish by most real time measures with a big caveat being that the good sector's quality assets can grind higher while office remains an anchor so that national average looks tame even if parts of the market seem like they're performing very well and feel more like a rebound.
- [31:08]
Lonnie Hendry
I may be a little more optimistic here, Steven. I think to answer this question we would probably need to look at. I mean this goes back to my real estate by definition as a local, sometimes hyperlocal endeavor, two buildings on the same street can have two entirely different outcomes. I would agree with you on the whole if we just said lump it all together. What do we think is going to happen to property prices holistically? Yeah, single digit increase probably a pretty safe bet here. But I think we're set up for some of these markets and some of these property types to have some really strong value growth in 2026. I think if you look at multifamily as an example, this is one that we haven't really delved into over the last couple of months that we probably should spend some time on because there is this continued bifurcation and multi. I even saw some stuff this last week highlighting some of the nuanced delinquencies in Fannie and Freddie that haven't really caught anyone's attention but they're starting to raise some eyebrows. So you're going to have some have nots in the multi sector but for those that have produced and are stabilized with the shortage of new construction across the US for the next two or three years, I think we're really poised to see some strong rent growth and inflationary cost pressures have really been abated in a lot of markets. Insurance has finally started coming down specifically for multifamily. So I think you could see some markets in multifamily, you know, have 10, 12, 15% type of price increases. I think we're going to have some really strong green shoot stories in multi in some markets I think even in industrial with the data center stuff I think we're going to continue to see a run up in pricing there even though they're just, my brain can't figure out how to support those values as is. I think you're going to continue to see a run up and I think for office, the well located offices, you know we've seen some of these in these SASB deals that have come through in 25. Stephen, the appraised values on these things are nothing to sneeze at. I mean you're talking about really low cap rates and really high values on a price per foot basis. I think you're going to continue to see that for the strong class A office where you're seeing significant increases in value. You know we had our friend Carmen Spinoso on guest podcast that we're going to release here shortly and you know he's really bullish on the retail sector too. So I, I, I'm, you know, sector by sector, market by market. I, I'm probably more optimistic on the price growth side or the, the value appreciation side than what just a, a conservative, you know, single digit overall estimate looks like.
- [33:36]
Steven Bushbaum
Yeah, I mean I hope you're right. The repeat sales indices usually do tend to be fairly sticky. The composites equally weighted index as of third quarter 25 clocked in at a 2.89% year over year increase. So I'm hoping we hit somewhere between 4 and 6% here throughout 2026.
- [33:56]
Lonnie Hendry
Yeah, I think if, if you're, if you're looking at the whole and you're at 4%, that's really strong. Yeah, but I, I'm, you know, I think some of These markets that have flatlined for the last couple of years, you're. You're going to start seeing some renewed interest in them. I mean, like, let's take Austin as an example. You've seen rent declines there, I mean, significantly over the last two years. Have we hit an inflection point there where you start to see things stabilize and there's no new supply coming online? And does that market come back at some level where, you know, you see 5% rent growth and cap rates start to come back down and you might see some really solid growth? You look at Dallas and Fort Worth, I mean, we've reported on multiple sales transactions across different asset classes in the DFW market that I think you're going to see continued price appreciation here. I think la, San Francisco, the one wildcard for me on the big city side would just be Chicago. Can they finally get out of their own way and let the fundamentals take back over and see Chicago return to some semblance of itself? I think Florida's poised just broadly to see continued growth. I mean, I know Miami's cooled at some level, but if you look at some of this wealth tax stuff that's being discussed in California again, Texas and Florida are going to be the benefactors of anyone that decides to leave there, just like they are when they leave New York. And the mayor stuff in New York hasn't played itself out about, obviously. So, I mean, there's a lot of interesting. I mean, there's no shortage of preview topics that we could talk through heading into 26 that I think could bode well for some of these local markets. We haven't really got into it at all. But what about the stuff in Minnesota with the daycare man? I mean, like, that, that could shift that entire commercial real estate market. I mean, like it feels like if those claims of fraud and everything are proven to be true, every single one of those locations, facilities, whatever is paying rent to a commercial landlord. If that's all a bogus sham that could materially negatively impact that local economy. I mean, overnight.
- [35:58]
Steven Bushbaum
Yeah, the way the current political landscape is shaped right now does not bode well for that, for that Metro, I think the hammer could come down very hard. And just the nature of these things, when you see headlines like that, things cool very, very quickly from the lender side. I mean, it is, is very much pencils down. Let's take a wait and see. We need to better understand what's going on here.
- [36:23]
Lonnie Hendry
Yeah.
- [36:25]
Hailey Keen
So as I mentioned in the beginning, guys, this is our last episode. Of 2025, which is crazy to think about, but as we look ahead to the new year, which we've been doing all episode, maybe you can think more specifically about setting some resolutions. I don't need to hear if you're going to the gym more or eating healthier, you could tell me that too. But maybe let's hear what you would wish for commercial real estate or if you could set a resolution for the market in 2026.
- [36:54]
Lonnie Hendry
So I think the number one thing, and Steven kind of highlighted this earlier in the show, but I think New year's resolution for CRE markets in 2026 has to be capital structure and discipline there. I think as the markets become more bifurcated and the haves and have nots become more clear, leverage levels, floating rate exposure, preparing for this hire for longer, all have to be part of the plan. So I think that disciplined approach has to persist into 2026. And I think for those that can stay disciplined because there are going to be some bright light opportunities here that maybe people want to stretch and kind of go outside of their, their normal parameters and there's plenty of money available. I think discipline is going to win the day. And so that would be one of my 2026 resolutions.
- [37:43]
Steven Bushbaum
I'm going to follow up with a similar resolution here that I would like to see the market refinance early and not heroically, I would like to see a really sound maturity plan well ahead of time. And I would really love to see a lot of loans get taken out early in their open period rather than waiting till the very end because I rates today are a given and you're a lot better off, a lot safer off taking today's rates rather than hoping that maybe we grind slightly lower and you can grind out every last basis point.
- [38:21]
Lonnie Hendry
Yeah, I think, I think the hope is not a strategy still holds true and I think that's a great, that's a great resolution, Steven. Maybe another one here would be for our listeners is just the headlines are only half the story, right? So in 2026, dig a little deeper, get to the data, listen to the show like that's where we live, right? We want to try to bring context and clarity to complex dynamic marketplace in the CRE landscape where the headlines only tell you a part of the story. And I think 2026 is set up to have some really big headlines. I mean, data centers by themselves, AI by themselves. I mean one or two things happen and those either continue their trajectory like a rocket ship or they come sinking back down to Earth. And that has significant ramifications across the landscape. And so I think we're all supposing that the AI wave and the data center wave and these things continue the current trend. But there's some, there's some bumps in the road that we're going to have to overcome this year. And I don't want people to get sucked into the headlines. I mean, I think all of us with the maturity wall and other things like, we've experienced that at a pretty high level. So, you know, my resolution, second resolution would be dig, dig beneath the headlines, dig deeper than the headlines, try to anchor to some, some data. Because I think there's going to be some really compelling opportunities for those that go a couple of steps deeper.
- [39:41]
Steven Bushbaum
Yeah. So to just compound on that, I would say make data driven decisions a habit. And that's what we here at TREP are here to help you with. We have the data to help give you the insights and cut through the headlines.
- [39:55]
Lonnie Hendry
And I know Hayley said she doesn't want to know if we're going to work out more or whatever. Right. So I'm not going to bore anyone with my, my terrible eating habits of only five foods. But we would love to have our listeners make a resolution that says they want to not miss an episode in 2026. We have some really great guests lined up for 2026. We have some really cool and exciting things on tap for 2026. And so I think, you know, we pride ourselves on not missing a week and we pride ourselves on bringing 100% effort every week, even during the holidays. And in fact, I think last week's show was one of our best shows of 2025. And so I hope for those that are continued supporters and listeners, you resolve to continue giving us your time and effort and we'll continue to give our best to you every week. And if you don't mind, maybe a few of you make a resolution to leave us a five star rating on itunes or Spotify or whatever so that our show can get, get, you know, boosted up there.
- [40:57]
Steven Bushbaum
Well, if I can really add on to that, I mean, that's, that's pretty sound, right? Pretty clear call to action.
- [41:02]
Hailey Keen
I love it, guys. I think my, I don't know if this is a resolution, but maybe a hope for the industry is along the lines that you said, Stephen, just better storytelling. We need people to not just throw narratives out there, but back it by data. Share your wins, share your losses so that everyone in the industry can learn. I think you guys do a great job of giving perspective and context when we're talking about what is happening in the market and what's going to happen. So it's been a great year and thank you guys for all the insights. I'll give a few programming notes before we close here. We've talked a lot about our Year End magazine that will be live during the CREF C Miami conference. So if you'll be at that conference, you can get a hard copy from our team there. But it will also be online digitally. So subscribe to our Trep emails, follow us on Twitter or LinkedIn. So that way you can get a copy of that magazine or reach out to us in advance and we'll make sure you get access. If you're going to be at crefc, send us a note. We have a calendar that's filling up quickly, but we'd love to meet with you. We'll be around even just to chat, grab a coffee, grab a drink. We'd love to talk with you, learn about what you're doing in the industry and why you listen and and we can give you a shout out on a future show. We still have our Save the Date out there for our TREP Connect in New York City conference. So we're looking ahead to 2026 and this will be a conference you don't want to miss. Taking place May 6th and 7th in New York City. We're hosting this event for people across the industry to really connect, grow and learn from each other and experts that we bring in. So stay tuned. We'll have details, agenda announcements, speakers and more information. But if you want to sign up early, you can get a discount code. So reach out to us and we'll get you access to get a ticket for that conference and then for shout outs this week. Lonnie, you mentioned all the great guests we had this year. I wanted to reflect quickly on everyone that's been a part of our show this year and call out their names so you can go back and listen to those episodes if you missed them. So in early January, we had Bernadette Brennan from Sirhant come on the show to talk about getting eyeballs and closing deals. And this is their commercial arm. You might know Sirhant from the show. We also heard from David Auerbach of Hoya Capital giving us his 2025 REIT playbook. We might need to check back in with David and see what he's thinking about the REIT market in 2026. In February, we had Scott Douglas of Prime Finance on the show to talk about the evolution of the BP spire from the 90s to today. Scott was extremely insightful and had a lot of knowledge about the CMBS industry. Next we heard from Bill Sexton, the CEO of Trimont, and he gave us an exclusive look at Trimont's acquisition of Wells Fargo's Learn's loan servicing business and broke it down what that meant for his firm and the industry at large. Michael Bull of America's Commercial Real Estate show joined us this year and talk to us about why he's bullish on cre. Our own CEO Amari Dicola joined us this year to really give us insights from the top. If you're really curious about who TREP is, how we get our got our start, and also the evolution of the CMBS industry, check out our episode with our CEO Anne Marie decola. She will also be speaking at the CREF C conference on the Industry Leaders Roundtable. Our friend Ruth Culp Haver, the Queen of Subleases in New York City, joined us in April to talk about everything from skyscrapers to sublets and the New York City leasing market. We had a really cool episode with our friends Bo and Timmy Barron, who are the hosts of the commercially speaking podcast, and they talked about making CRE accessible and gave us the ins and outs of running their own show and what they're doing to educate others in commercial real estate. In May, we had Red Oak CEO Gary Bechtel on the show to talk about commercial lending and investing through market changes. We had an excellent speaker at last year's TREP Connect Conference, Sam Tenenbaum of Cushman and Wakefield, and then we invited him on the podcast to talk about multifamily insights and realities and his narrative was go where the herd isn't. So that was a really cool episode. Someone you may have seen a lot on LinkedIn. John Tuhig of Raymond James joined us in June to talk about trading through cycles and he gave us insights into the whole loan market. We also had our friends Danielle DiMartino Booth and Dan McNamara back on the show to help make sense of the constantly revised macro data and what it means for cre. If you want a really good macro deep dive, that's a great episode to check out. We've had them on the show multiple times. A longtime friend, Jeff Berenbaum of Citi Research joined us to talk about from data centers to derivatives, and he gave us the four Ds of 2025. And then next we had another expert from Prime Finance on the show, Steve Chow who talked all about CRE clos. An executive at Madison Realty Capital, Sameer Tejpal, joined us to talk about when the tides pulled back and finding CRE opportunities in supply, demand imbalances. Samir is awesome. We met him at last year's CREF C conference and he's doing a lot of great things at Madison, so it was great to hear from him on the show. And then a few more here we had our longtime client and friend Shlomo Chop, the workout expert, back on the show who gave us an unfiltered look at CMBS loan workouts. Another longtime listener and friend, John Barcadia of Byline bank, joined us to talk all things Debt Yield. This is Dr. Debt Yield. If you haven't heard of his name before, we had a really exciting episode with WeWork CEO John Santora. So thank you for joining us and talking about how you're really evolving the WeWork company and the power of flexibility. And then lastly, we recently had Michael Comparato of Benefit Street Partners on, who really talks about the fact that we are in the eye of the commercial real estate storm on. So thank you to all of our guests who add an additional layer of expertise to this show. We welcome your insights and we hope to have even more guests on in 2026. Send us a note. Send us a pitch if you or someone in your firm should be on our show. So we'd love to chat with you and just hear about what you're doing in the industry. So happy New Year, guys. Thanks for another great year of the Trepwire Podcast. We have hit more than 2 million listens. We are. We have more than 370 episodes, so we're not stopping. We'll keep the show rolling in 2026 and we're excited to have you all along for the ride. So see you in 2026. With that, we'll close. Thanks to our producer, Carly Santo. Join us next week as we look at what's happened during the week and how it may be impacting you. If you have a question or just a comment, send an email to podcastrup.com and subscribe to the Truckware Podcast with your favorite provider. Thank you for listening and stay well.
- [48:21]
Lonnie Hendry
All right.