The Inside Look with Xander Snyder - Episode 25

In this episode of Inside Look, Xander Snyder explores five forces shaping the commercial real estate market in 2026. Prices have stabilized after recent declines, helping transactions and refinancing activity begin to recover. While distress remains elevated—especially in office and multifamily—more assets are trading, signaling that pricing has adjusted enough to attract buyers. Lenders are also reengaging, supporting increased liquidity. Together, these trends point to a shift from stabilization toward cautious, uneven market acceleration.

Hi, I'm Xander Snyder, and this is First American Title's Inside Look.

Look, 2025 was a transitional year for commercial real estate. Prices stopped falling. Distress started to surface more clearly, and transaction volume began to gradually increase. That is what a handoff between two cycles looks like in 2026. The question isn't whether things are totally fixed.

It's whether conditions are in place for momentum to build in this early phase of the next cycle. Today, I'm gonna cover five forces that will be shaping the commercial real estate market this year. The first thing to consider is prices after sharp corrections in 2022 and 2023. Price growth has stabilized across all major property types.

Prices have even stopped declining for urban office buildings, which underwent the most substantial price adjustments over the last several years. Price stability doesn't translate to broad market strength necessarily, but it does reduce uncertainty. It reflects buyers and sellers agreeing more regularly on what assets are truly worth, and it gives lenders confidence about the underlying valuation of the collateral that they're lending against.

This is what allows markets to unfreeze and begin to act a bit more like normal. Next, let's look at sales volume As prices stabilized sales activity has increased gradually across most major assets. It's still well below pre pandemic levels, but that's not really the right benchmark to think about at this stage of the cycle.

What matters is that buyers are increasingly willing to transact at today's prices. Which tells us that price discovery is largely behind us. This is a green light for risk averse capital to return to market in greater levels. So think core or core plus types of funds. A similar pattern shows up in refinancing after bottoming in early 2024.

Refinancing activity has more than doubled returning to levels, not seen since 2019 or 2021. Taken together higher refinance and sales volume. Don't remove the risk from the system entirely, but they do reflect increased liquidity, which creates opportunities as the cycle turns distress is still rising, particularly in office and non-agency multifamily CNBS or commercial mortgage backed securities office.

Delinquency rates are currently at levels comparable to post global financial crisis highs. Multifamily stress is building as loans originated in 2021 and 2022, continue to mature. Distressed assets are starting to trade more frequently, but this is also where we're seeing the first signs of clearing, distressed assets are starting to trade more frequently, which suggests that prices have adjusted enough for capital step in and reposition these distressed assets that do have a future.

So distress is not yet behind us in 2026, but as more buyers return to the market to purchase those distressed assets, delinquency rates will peak and begin to gradually receive. The peak in CMVS. Delinquency rates will probably come in 2026, but private lenders, um, banks, life insurance companies or investor lenders may continue to delay recognition of some distress.

On the lending side more broadly, most major lender types have reengaged banks, agencies, and investor lenders. All increased origination activity in 2025 CMBS issuance cooled somewhat from 2024 surge, but remains well above. Its 22, uh, 2022 lows. Now, as for amend and extend loans, as they continue to resolve capital that's been tied up in them will get freed and redeployed.

Taken together. These five forces don't point to an all clear moment yet in 2026, but they do point to a shift in stabilization to acceleration. It'll be uneven asset class specific and risk aware acceleration, but increased momentum. Nevertheless, thanks for joining me on the inside look, and we'll continue to see you throughout the new year.