We checked in with some industry leaders to get their predictions for various topics in the commercial real estate market for the rest of the year. From equity investing, construction, bridge, CMBS lending and condos, the experts give us their forecasts for 2026. Also, check out this recent article that includes the MBA’s predictions for the year and make sure to attend the Crittenden Report Finance Conference for more insight.
Giovanni Cordoves, Regional President, Western U.S., KBS
In regard to equity investing, Cordoves predicts that 2026 will be a more active year than 2025, which to some extent was stunted due to the “noise” around tariffs that began in April and continues to this day, as well as delayed cuts to the federal funds rate.
Ethan Habecker, Director, JLL Capital Markets
Habecker comments on the condo/townhome market. Condo and townhome construction lending will remain available but selective, with capital concentrating on projects that demonstrate clear end-user demand and achievable absorption timelines. The focus will be on markets with strong unit absorption because sellout timing is as important. We continue to see end-user demand for well-located high-end product in coastal markets targeting sell-down buyers leveraging Props 19, 60 and 90 in California and luxury product located in the ski resort markets of the Mountain West.
Jack Hunsicker, Director, JLL Capital Markets
Hunsicker also give his predictions for condo and townhome lending. As we look to 2026, lenders continue to focus on exit certainty and sales velocity rather than forward price growth. Developers may face higher equity requirements, more scrutiny around sales assumptions and a greater emphasis on realistic construction and sellout timelines. This will be especially true in the “commodity” townhome space where the end buyer is much more sensitive to interest rates, and you are competing with true single-family product.
Daniel Lisser, Senior Managing Director, Capital Advisory Services, Lee & Associates NYC
When it comes to CMBS lending, Lisser foresees that the market has turned into a five-year-term market and getting bond investors to accept five-years terms (as their preference is 10 years) might be an issue. Also on the conduit side, deal size is an issue as the top 10 loans comprise a higher percentage of the total deal limiting diversity. Investors would like larger conduit deal sizes (over $1B) but issuers like getting the loans off their books quicker, hence the smaller, more frequent conduit deals. Overall, the shift to five-year terms has been a credit positive and an indication that property cash flows, valuations and economic conditions remain uncertain. As CMBS continues to change, it is important for fixed-income investors to remain nimble.
Ed Steffelin, Managing Director, George Smith Partners; President, AXCS Investments
Steffelin gives his predictions for the biggest changes in construction lending this year. He forecasts the rise of private credit in construction. Alternative lenders (debt funds and mortgage REITs) captured 37% of non-agency loan closings in 2025, surpassing banks at 31%. Private lenders are pivoting aggressively into mezzanine and construction financing. He also foresees construction cost recalibration. Inputs are 40%+ higher than in early 2020, with tariffs adding pressure on steel and aluminum (50%+ duties at various points). Immigration policy is tightening labor supply, pushing wages higher. Developers need to underwrite with real contingency buffers, not pro forma optimism.
He also notes a supply gap opportunity. Construction starts dropped meaningfully in 2024 and 2025 across most product types. Multifamily starts in particular are at multi-year lows. Lenders recognize that projects penciling today will deliver into an undersupplied market, and that’s making them more willing to come to the table. He points to technology driven underwriting. AI and automation are streamlining draw management, budget monitoring and risk assessment. Lenders who’ve invested in these platforms can move faster and offer better borrower experiences. He predicts pre-leasing and pre-sales as a non negotiable. Whether it is condos, office, or even speculative industrial, lenders increasingly want to see demand validation before committing. The days of purely speculative construction financing are mostly behind us.
Scott Taccati, President, Trillium Capital Resources
Taccati gives his thoughts on bridge lending. He expects continued growth in bridge lending given the massive pending maturity wall over the next couple of years. This will fuel demand for transitional financing as borrowers refinance or stabilize assets amid stabilizing but elevated interest rates and tighter credit conditions. Expect a shift toward more institutional involvement, with private credit funds deploying billions into bridge loans for value-add opportunities, particularly as traditional banks remain cautious. Overall, the market could see much higher originations with a focus on risk mitigation through structured exits and conservative underwriting.
Underwriting in 2026 will be more selective and “ruthless,” prioritizing assets with strong cash flows, proven sponsorship and clear business plans, while stressing exit scenarios like refinances or sales. Lenders will focus on remaining CapEx, volatility in cash flows, and DSCR thresholds (often requiring >1.20x), with many deals needing paydowns or mezzanine layers if below benchmarks. Compared to 2021 and 2022’s optimistic assumptions on rent growth and quick lease-ups, expect conservative after-repair values (ARV), higher scrutiny on rate-cap expirations and contingency planning for extended maturities. Community banks may loosen slightly, but overall discipline will tighten to navigate the $115B in low-DSCR loans maturing by year-end.
Kellan Liem, Director, JLL Capital Markets
Construction lending has been constrained not by availability of construction debt capital, but by equity availability and fundamentals/profitability of projects. As construction costs continue to come in slightly, and asset values continue to increase, construction will make incrementally more sense. Construction activity increased in 2025 and I fully expect it to increase yet again in 2026, however, in (for example) residential construction, we are down 77% in total starts from our peak – so there is a lot of recovery left, and I do not expect us to fully return to normal in the next year.
