Early Signs of Continued Stabilization in Commercial Real Estate

A February 9, 2026 article by Jon Tollefson, managing director at Bridgewater Bank, highlights growing optimism in commercial real estate as 2026 begins. The piece points to improving lending momentum, stabilizing interest rates, and renewed transaction activity.  Developers and lenders are seeing better capital availability, particularly in industrial and multifamily sectors, with data such as the CBRE Lending Momentum Index signaling a pickup in loan closings and financing activity.

Our Take

For private market investors, the key takeaway is not that the market has “recovered,” but that conditions are transitioning from contraction toward cautious expansion. Over the past two years, higher interest rates and tighter bank underwriting compressed values and slowed deal flow. That reset forced more disciplined pricing and more conservative leverage structures. Now, as financing markets gradually reopen, the marginal cost of capital appears to be stabilizing rather than rising further which is an important shift for underwriting assumptions.

This stabilization affects asset pricing in two ways. First, when lenders become incrementally more active, refinancing risk declines. That reduces the forced sale pressure that often drives steep discounts. Second, as transaction volume increases, pricing discovery improves. Buyers and sellers regain confidence in valuation benchmarks, which can narrow bid ask spreads.

However, improved lending momentum does not eliminate risk. Supply dynamics remain sensitive to recent delivery waves, and rent growth is moderating from peak levels. Investors should remain selective, focusing on submarkets with durable demand drivers, tenant credit quality, and functional real estate that will remain competitive through a full cycle. Conservative leverage and realistic exit assumptions remain essential.

In short, the early 2026 tone is one of cautious normalization. Capital is returning, but discipline still matters. For long term investors, this environment often presents attractive risk adjusted entry points. Pricing has adjusted, underwriting is more grounded, and competition has not yet fully returned to prior cycle intensity.

Source: 2026 CRE Outlook: Trends and tips for developers

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