New England Chapter of The Counselors of Real Estate market review and prediction for 2026
Boston, MA On October 21, the New England Chapter of The Counselors of Real Estate (CRE) held its quarterly lunch with guest speaker Dianne Crocker, research director of Light Box. The event took place at the Federal Reserve Building. There were approximately 25 in attendance along with John Baczewski, in-coming CRE global president who visited the chapter and gave updates and plans for 2026. Crocker then gave a presentation of her insight to the Q4 of 2025 and 2026 on the economy and real estate.
Here is a summary of the presentation entitled “Q4-2025, Managing Through the Chaos.”
The 2025 year did not go as predicted by script from earlier in the year. The year was not as bullish as expected as 2024 was a slow year. Interest rates did not decrease as fast as they were predicted and when it did decrease, it was only half of the decrease in Sept. 2024.
April, 2025
The tariff announcement started a whipsaw of the economy and unsettled the market. Real estate deals that were under way tapped the brakes to rethink closing. The January predictions had to be revised.
The economy seemed to be back on track and people were not overly concerned about the tariffs. Real estate projects did close and it was very busy with investment deals. Capital was very available and banks did not stop lending as earlier thought would happen.
Corporate Earnings
Corporate earnings stayed positive in the first half of the year and there were active investors. And finally the office sector turned the corner in a positive way.
Key Themes of 2025
The Feds cut rates and that created a psychological boast and shift that easements in the rates are finally happening. However inflation is now on increasing while the labor market is getting weaker. This does not bode well for interest rate direction. The good news is that the 10 year Treasury dictates cap rates and we should get two more interest rate cuts.
Year to Date Transactions
We have experienced $221.2 billion with commercial real estate transactions. September, 2025 experienced a big surge probably due to the fact that people came back from summer vacation. September was in fact the highest month of transactions in 2025. There is still a gap between ask and bid prices but that status is narrowing.
Great Reset of All Real Estate Asset Classes
Of all the properties sold this year, 26% were sold at a discount, while 74% were sold at a higher price. The office sector experienced the biggest distress sales. 2025 values average price increased by 3% to levels of 18% below the 2022 peak.
Transactions
The strongest sector of real estate in 2025 has been multi-family then retail and industrial. Q2 of 2025 experienced 31% QtoQ increase of purchase agreements. The fear factor has dissipated. Multi-family still has the highest interest for investments with buyers and lenders.
CREFC Sentiment
The 2025 Q3 index is up to 122.8 or a 9% increase QoverQ. This is the highest index since 4Q of 2024. 95% of those surveyed expect more commercial real estate borrowing in the next 12 months and 86% expect more commercial real estate transaction volume. 65% expect more liquidity and improvements with the tariff impact as a macro wild card.
Debt Market Continued Liquidity I
The liquidity has moved back up from 2023-24.
Loan Maturities Resolving Slowly
The “snow effect” of past years has driven refinancing urgency. $600 billion loans were extended from 2023-24 with almost $300 billion due. Over $600 billion was refinanced. The office loans made up 20% of the maturing commercial loan debt and 30% of the office loans were worth less than the original loan amounts. This sets the stage for significant refinancing activity by 2026.
Asset Classes
The fundamentals were generally good with commercial real estate and it helped that investments were being held long-term. We are not however in the blue sky territory anymore as some may think but everything is “up” in the year. We need to change our real estate analytical modeling and not look at rents or occupancies that millennials tend to focus on during investment analysis. You need to really understand the market and tenants.
Risk Profile
Multi-family real estate is still at the top of the pile and sitting good. The urban cores are regaining population momentum and sustaining valuation volume in gateway markets. However insurance costs are sky high effecting NOI. Rent growth is also slowing and opex is increasing. Boston is rated 16th top city for multi-family investments and is the only New England city in the top tier. NYC is rated #1 for multi-family.
Office Sector
The U.S. vacancy rate declined for the first time since 2019 falling to 22.5% in Q3 2025. NYC surpassed leasing from 2018-19 era but US wide, leasing remains 11% prior to COVID. Boston had 1.9 million s/f of leasing in Q3 2025 which is the highest absorption since 2019. Office to Market
Office investments continue to build steam with 3Q of 2025 QtoQ increase in properties listed for sale. It will still be a process on selling office investments and managing back to work mandates.
Industrial
It is finding a new equilibrium after Covid. The leasing demand is moderating but the investment fundamentals are strong. New construction by 2026 will have dropped to a 11-year low. The bright spots are cold-storage and AI driven infrastructure, but it is not a sure bet. The trade policy weekly shifting is still a problem for industrial users.
Retail
The retail vacancies are at record lows with limited new supply which is helping to stabilize values for grocery anchored centers and experimental retail centers. Discretionary spending is still most impactful and may be decreasing. The least over-priced sector in retail is major food group centers.
Data Centers
This sector is hotter than ever. There is $3 trillion to be invested in data centers globally by 2030. However access to power will be a key factor.
Near-Term
Dianne stated that she sees the glass half full for real estate and the economy with tariffs being the wild card. She also needs to see where the labor market is going. The August 2025 unemployment rate rose to 4.3% which is the highest since October 2021. Good news is that there may be low hiring but there is low firing.
August, 2025 added only 22,000 jobs which is a significant slowdown in hiring. June was the first net loss in jobs since December 2020. However the Mortgage Bankers Association members are expecting a 24% increase in loans in 2026 from 2025.