Commercial real estate faces a critical turning point in 2026, driven by a massive wave of maturing debt, rising long-term interest rates and uneven performance across property types, according to Greg Friedman, CEO of Peachtree. Unlike the earlier industry mantra to “survive to 2025,” he suggests the new mindset is “grind to 2029,” emphasizing a prolonged recovery period rather than a rapid rebound.
Friedman made the remarks during a CNBC Fast Money segment, where he explained the forces shaping the market. Up until now, the market has largely extended out issues rather than addressing them, Friedman said. That has resulted in about a trillion dollars of loans maturing in 2026 — roughly double the normal amount — at interest rates 50% to 100% higher than when they were originated. CRE debt maturities are set to peak at nearly $1.3 trillion in 2027, according to S&P Global.
Friedman describes 2026 as an inflection point, not because asset-level fundamentals are weak, but because balance sheets need to be recalibrated. Many troubled loans were extended in recent years, particularly by banks, which make up about half of the CRE debt market. As lenders begin to sell off distressed loans or allow assets to trade, the market will see more transactions and price discovery, he said.
The office sector is showing a pronounced bifurcation. Class A offices across the country are stabilizing, with demand supported in part by AI-driven growth that is fueling tenant interest. Meanwhile, Class B and C offices continue to struggle, particularly those in less desirable locations or with limited amenities and some buildings may never recover, Friedman said.
Other property sectors show selective opportunities. Retail and hospitality are seeing tailwinds after years of underbuilding, while multifamily prospects remain strongest in growth markets that continue to attract sustained capital flows. Data centers, meanwhile, face heightened scrutiny around power and infrastructure requirements.
Long-term rates are a major factor shaping the market. While investors often focus on Fed policy and short-term rate cuts, Friedman emphasized that the 10-year Treasury yield plays a greater role in property valuations. The current 10-year yield is about double that of 2010–2022, negatively affecting asset values. Despite reductions in short-term rates, long-term ones remain elevated and are expected to persist, while policy uncertainty keeps investors cautious and mutes market activity.
Despite the challenges, there are opportunities for investors. Peachtree purchased $600 million in loans at 10–20% discounts in 2025 and originated an additional $2.4 billion in first-mortgage financing for acquisitions and development, Friedman said.
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