The history
Starting in early 2022, the Fed raised interest rates 11 times in about 18 months. If you were in CRE, you felt every single one. Borrowing costs nearly doubled. A loan you could've locked in at 3.5% was suddenly north of 6%. And just like that, the math on almost every deal changed overnight.
Sellers still thought their properties were worth what they were worth in 2021. Buyers were running new numbers and coming in way lower. Lenders got cautious and tightened up. And the result was a standoff, a gap between what sellers wanted and what buyers would pay that was wide enough to kill just about any deal. At its worst, that gap was running 10–12% on Class A office alone.
Transaction volumes dropped for five straight quarters. Not because there wasn't interest, but because nobody could agree on what anything was worth anymore. No one was able to justify the sale.
What made it worse
On top of the rate shock, there was a wave of loans coming due. A huge amount of commercial real estate debt had been locked in during the low-rate years, and now it was all maturing into a completely different rate environment. Borrowers who planned to refinance easily were suddenly facing hard conversations with their lenders. Some extended. Some brought in new equity. Some just waited and hoped things would get better.
So what changed?
Honestly? Time. And reality.
The Fed started cutting rates in late 2024, eventually bringing them down to the 3.5–3.75% range by the end of 2025. That helped. But the bigger shift was psychological. Sellers started accepting that 2021 prices weren't coming back. Buyers stopped waiting for absolute perfection. And the gap that had been keeping deals apart started to close.
By the end of 2025, transaction volume had jumped almost 20% year over year. Not back to pre-pandemic levels, still about 30% below 2019, but real, meaningful movement after two years of almost nothing.
Where we are now
The Mortgage Bankers Association is projecting $805 billion in commercial lending this year, which is up 27% from 2025 - tcan he highest since 2022. Colliers is forecasting a 15–20% increase in sales volume. Institutional capital and foreign buyers are coming back to the table, drawn by pricing that's finally realistic.
This isn't a gold rush. It's not 2021. But it's not 2023 either. The market found its footing, and the people who patiently kept doing their homework, kept their relationships warm, and didn't panic, are the ones making moves right now.
So basically
The freeze wasn't fun for anyone. But it did something important. It forced pricing back to reality. And now that it has, deals are happening again. Not because conditions are perfect, but because they're honest. And in CRE, honest pricing is all you really need to get to work.
What it means
This isn't a boom or dramatic CRE comeback. But after two years of the market being essentially frozen, movement is movement. Deals are getting done. Capital is flowing. And the people who stayed patient, kept their relationships warm, and did their homework are the ones making moves right now.
The window won't stay this way forever. As more capital comes in and competition picks up, the deals that look obvious today won't be so obvious tomorrow. If you've been waiting for a sign that it's time to get back in the game, well, this just might be it.
Sources
MBA, Colliers, Altus Group, CRE Daily, CRE Analyst
