Snyder says capital is opening up, but the second half of 2026 will be defined by whether tenants and consumers can hold on
As the commercial real estate market reaches the halfway point of 2026, the question for the rest of the year will be where opportunities for mortgage brokers will present themselves.
Interest rate volatility was one factor in the CRE space that controlled pricing, deal flow, and lender appetite. However, stabilization of capital markets has allowed lenders to compete for deals once again. While rates remain elevated over recent lows, they have found a range that makes costs more predictable.
According to one commercial economist, the market is healthier than it was a year ago, but the source of risk has changed. He believes tenant demand and consumer resilience are now doing more to shape outcomes than the Fed's next move.
Xander Snyder (pictured top), principal commercial real estate economist at First American, said brokers who succeed in the second half of the year will need to work around changing demand.
"I think that brokers who can think intuitively about how to underwrite demand, like leasing demand, are going to be in a little bit of a better position," Snyder told Mortgage Professional America. "Because I think that that is sort of what the next big uncertainty is in the next phase. Capital is opening up, but there are a lot of uncertainties when it comes to consumer demand, leasing demand, so on and so forth."
Beyond arranging the capital
Snyder said brokers who can speak credibly to rent growth, occupancy, and expense pressures at the property level are going to separate themselves.
"Having an idea beyond just arranging the capital, but kind of understanding the local demand trends for specific properties, specific areas, I think that'll help mortgage brokers solve problems for borrowers more than just, hey, this rate beats that rate," he said. "That's all a question of rent growth, occupancy, what's going to happen with expenses and whether expenses can squeeze NOI margins at some particular property."
The consumer behind that demand has held up longer than Snyder expected, but the recent data is starting to shift. Consumer spending's contribution to GDP growth fell from 2.3% in the third quarter of last year to under 1% by the first quarter of this year.
"The recent data does suggest that's turning a little bit," he said. "Some categories of retail spending that is directly tied to commercial real estate demand, like food at home and eating at restaurants, certain types of discretionary spending, that's all more exposed to a pullback in consumer spending more broadly."
A new wave of student loan borrowers losing deferments and low repayment plans on July 1 adds another pressure point, Snyder said, particularly for younger households and renters. What worries him more is how little room consumers have left to absorb a setback.
"All of these headwinds have been apparent now for the better part of two years. Rising credit card debt, rising delinquency rates on credit card debt, same with auto loans," he said. "It just seems like the consumer doesn't, on average, have a whole lot of wiggle room if something bad happens to them."
Measuring demand pullback impacts
A weakening consumer would not hit commercial real estate the same way everywhere, Snyder said. The exposure depends heavily on property type and lease structure.
"If it gets to the point where renters need to find roommates, that could impact renter household formation, that can impact leasing demand for multifamily," he said. "If people are buying fewer things because their budgets are stretched, that could impact the demand for warehouse space to store the goods."
Long-term leases provide some insulation outside multifamily, Snyder said, since a corporate tenant facing a temporary slowdown is unlikely to break a lease and absorb a cancellation fee just to save money in the short term.
Snyder encouraged brokers to make sure they have access to all the products they’ll need and be ready to move quickly as lender competition intensifies through the rest of the year. He said the areas worth watching are how lenders compete for business, whether covenants continue loosening, and whether rising input costs squeeze property-level margins enough to affect loan serviceability.
But as far as a big drop in mortgage rates, Snyder pushed back on the assumption that long-term rates are due to fall significantly from here.
"Don't assume that long-term rates need to come down from here," he said. "I think that it's a big assumption that a lot of people are making and it doesn't need to be true."
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