The Real Estate Roundtable (RER) reports that its First Quarter 2026 Sentiment Index registered an overall reading of 66, a marginal decline of one point from the fourth quarter of 2025. The latest results indicate that industry participants see the commercial real estate market in the early stages of a tentative and uneven recovery, rather than in a clear expansion phase.
Respondents to the survey described conditions that remain challenging for transactions and capital deployment. Persistent uncertainty around interest rates continues to weigh on underwriting assumptions, return expectations, and the cost of both debt and equity capital. At the same time, tariffs are adding another layer of unpredictability to construction costs, supply chains, and operating expenses, complicating investment decisions across property types.
These macroeconomic and policy factors are contributing to wider bid-ask spreads between buyers and sellers. Owners are often reluctant to mark assets down in line with higher financing costs and shifting demand patterns, while prospective buyers are seeking discounts to compensate for perceived risk and potential further repricing. As a result, price discovery remains slow, and many assets are staying off the market or trading only after extended marketing periods and negotiations.
The Real Estate Roundtable’s Current Index component, which reflects views on present market conditions, increased by two points from the prior quarter. This suggests that while overall sentiment is essentially stable, industry participants see modest improvement in current fundamentals relative to late 2025. Even so, the combination of rate volatility and trade-related pressures is preventing a more decisive recovery in transaction volumes and valuations.
For commercial real estate stakeholders, the Q1 2026 Sentiment Index underscores a market environment where patience and disciplined underwriting remain critical. Investors, lenders, and owners are navigating a landscape in which capital is available but selective, and where small shifts in policy or rates can materially affect deal feasibility. Until interest-rate expectations and tariff policies become clearer, market participants should expect continued friction in pricing and a gradual, uneven path toward normalization.
