Capital Markets with Keith Darin – October 2026

October 26, 2026

2026 Capital Markets Outlook: Interest Rates, Treasury Yields, and CRE Valuations

On the Spot with Steve Williams and Keith Darin

Capright’s Keith Darin joins On the Spot to discuss the economic forces shaping CRE capital markets, the impact of rising Treasury yields, and what investors should watch through the end of 2026.

As 2026 enters its final quarter, CRE investors are navigating a complex economic landscape marked by interest rate volatility, inflationary pressures, and shifting capital markets conditions. While economic growth has remained relatively resilient, rising borrowing costs and uncertainty surrounding long-term Treasury yields are creating new challenges for commercial real estate transactions and valuations.

In the latest episode of Capright’s On the Spot podcast, host Steve Williams sits down with Keith Darin to examine the key economic indicators influencing capital markets in 2026 and what they could mean for CRE investors as the year draws to a close.

Economic Indicators Shaping Capital Markets in 2026

Despite continued economic uncertainty, the U.S. economy has demonstrated resilience throughout much of 2026.

According to Keith, GDP growth averaged approximately 2.35% during the first half of the year, with third-quarter growth projected to approach 3%. However, several competing economic forces are complicating the outlook.

Among the most significant concerns are slowing employment growth, persistent inflationary pressures, and elevated energy prices.

These factors have contributed to a changing interest rate environment, including the Federal Reserve’s decision to increase interest rates in September.

For CRE investors, the combination of relatively strong economic output and restrictive financing conditions presents a complicated picture. While economic expansion can support property-level performance, higher interest rates may limit investment activity and put pressure on asset valuations.

How Rising 10-Year Treasury Yields Impact CRE

One of the most significant developments discussed in the episode is the rise in the 10-year U.S. Treasury yield above 5%, a benchmark with important implications for CRE financing and pricing.

Keith attributes the increase to several economic factors, including ongoing inflation concerns, the federal budget deficit, and expectations of substantial Treasury bond issuance to finance government spending.

As investors demand higher returns on long-term government debt, Treasury yields rise, influencing the broader cost of capital.

For CRE, the implications can be substantial.

Higher Treasury yields can increase borrowing costs, influence investor return requirements, and create downward pressure on property valuations. Properties trading at relatively narrow spreads over the risk-free rate may be particularly sensitive to changes in Treasury yields.

Multifamily assets, for example, have historically experienced some of the tightest spreads relative to Treasury rates, making the sector especially important to monitor as long-term yields increase.

As Keith explains, these movements are already beginning to influence pricing expectations across CRE markets.

CRE Fundamentals Remain Resilient

Despite the challenges associated with rising interest rates, Keith emphasizes that underlying CRE fundamentals remain relatively healthy across several major property sectors.

Multifamily: Supply Conditions and Rent Growth

The multifamily sector continues to adjust to the wave of new development delivered in recent years.

While certain markets have experienced elevated supply levels, Keith points to improving conditions as absorption catches up with new deliveries.

In some previously oversupplied markets, rent growth is beginning to recover, suggesting that improving supply-demand dynamics could help support property performance.

However, multifamily valuations remain sensitive to rising Treasury yields and changing investor return expectations.

Industrial: Absorbing Post-Pandemic Supply

The industrial sector is experiencing a similar adjustment period.

Following substantial development activity in the years after the pandemic, industrial markets have been working through new inventory. Keith notes that demand is increasingly catching up with those supply additions, helping stabilize fundamentals.

As supply and demand move toward a healthier balance, the sector may benefit from improving occupancy and leasing conditions.

These trends highlight an important distinction for investors: strong property fundamentals do not necessarily translate into stronger asset valuations when the cost of capital is rising.

What Is the CRE Capital Markets Outlook for Q4 2026?

Looking toward the remainder of 2026, Keith anticipates that elevated Treasury yields could constrain CRE transaction activity.

Higher financing costs and changing pricing expectations may create challenges for buyers and sellers seeking to reach agreement on asset values.

At the same time, relatively healthy property fundamentals across sectors such as multifamily and industrial provide reasons for cautious optimism.

The key question is how these competing forces will influence CRE valuations as the year concludes.

For investors, lenders, and property owners, several indicators will be particularly important to monitor:

• 10-Year Treasury Yields: Continued movements in long-term interest rates and their impact on property pricing.
• Inflation and Federal Reserve Policy: The direction of monetary policy and its influence on borrowing costs.
• Employment and GDP Growth: The strength of economic activity and its implications for CRE demand.
• Property-Level Fundamentals: Changes in supply, absorption, occupancy, and rent growth across asset classes.
• CRE Transaction Activity: How buyers and sellers respond to evolving financing conditions and valuation expectations.

Together, these indicators will help shape investment decisions, underwriting assumptions, and CRE valuations heading into 2027.

Watch Capright’s Latest On the Spot Episode: Capital Markets with Keith Darin

As the CRE industry navigates the final months of 2026, understanding the relationship between macroeconomic conditions, interest rates, and property fundamentals remains essential.

In this episode of On the Spot, Keith Darin and Steve Williams provide perspective on the economic drivers shaping today’s capital markets and the potential implications for CRE investors.

For additional CRE research, market insights, and valuation expertise, visit Capright.

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