Persistent geopolitical tensions in the Middle East are filtering through to the real economy, adding pressure to households and businesses already contending with higher costs. Consumers are seeing this most directly at gas stations, while fuel-intensive sectors such as aviation are expected to push increased expenses through to end users.
Marcus & Millichap senior vice president John Chang notes that the impact goes well beyond energy. Key commodities moving through the Strait of Hormuz have risen sharply in price, with some fertilizers reportedly up more than 50%, pressuring farming and agricultural operations. Helium, a critical input for semiconductor and electronics manufacturing, has climbed an estimated 10% to 20%, adding another layer of cost to high-value supply chains.
Logistics are also becoming more expensive. According to Chang, Trans-Pacific shipping costs have increased by about 35%, and flatbed trucking used to move shipping containers across the United States has seen costs rise roughly 26%. These higher transportation and input costs are feeding into broader inflation metrics.
Inflation data reflect this pressure. The annual Consumer Price Index released in March was 3.3%, an 85-basis-point increase from the prior month. On the production side, the Producer Price Index rose 60 basis points year-over-year to reach 4%. At the same time, Chang points out that consumer sentiment dropped to a record low in March, and job creation is running below historical norms, complicating the macroeconomic backdrop.
This combination of persistent inflation and slower growth leaves the Federal Reserve in a difficult position as it weighs its next moves on the Effective Federal Funds Rate. Policy choices must balance the need to curb inflation against the risk of further slowing economic activity.
Within this environment, commercial real estate capital markets are experiencing their own adjustments. Chang reports that economic volatility pushed CRE lending spreads higher, though he notes that conditions have begun to normalize in recent weeks. Bank lending rates for commercial real estate assets are currently in the 6% range, while agency-backed multifamily loans are pricing in the mid-5% range.
Despite the macro uncertainty, investor demand for CRE remains firm. Chang observes that capital flows and transaction volumes are rising, and he cites Mortgage Bankers Association expectations for a 15% increase in lending activity over the balance of 2026. That outlook suggests lenders and borrowers are gradually re-engaging even as broader economic signals remain mixed.
Chang emphasizes that the sector’s appeal in this environment is grounded in competitive yields, relatively durable cash flows, and the potential for commercial real estate to act as an inflation hedge. As volatility persists across other asset classes, these attributes are reinforcing CRE’s role as a strategic allocation for investors focused on stability and long-term value preservation.
