Lower Rates Unlock Deals, But 2026 Outlook Remains Murky Article originally posted on Globe St. on December 22, 2025 Transactions picked up noticeably in the latter part of 2025 as borrowing costs eased, yet the coming year’s trajectory is still very much in play, Marcus & Millichap reports. The firm notes that three 25-basis-point cuts to the federal funds rate have not fully filtered through the financial system, a process that typically takes months, but they have already helped pull the secured overnight financing rate (SOFR) down by 50 basis points to 3.93 percent over four months. Over the same period, the 10-year Treasury note yield fluctuated between 4 and 4.2 percent, down from the mid‑4 percent range earlier in the year, setting a lower baseline that should eventually translate into broader access to cheaper financing. Expectations for 2026 are fluid. The Federal Open Market Committee’s December 10 Summary of Economic Projections shows a median outlook of a single rate cut in 2026 and a second in 2027, underscoring how central bank officials currently see the policy path but stopping well short of a guarantee. Marcus & Millichap points out that additional economic pressure from tariffs, particularly if they affect vacancy, could prompt the Fed to delay future cuts, while labor market weakness could instead argue for further easing. Even before those policy choices are resolved, the recent rate reductions are already encouraging activity. Marcus & Millichap reports that closed transactions across the major property types are up more than 15 percent year-over-year, as competition among lenders narrows spreads and loosens some capital constraints. The firm adds that a 20.5 percent increase in lending caps for Freddie Mac and Fannie Mae could make the government-sponsored enterprises more competitive in 2026, potentially supporting additional deal flow in the multifamily sector. Performance and capital flows are diverging by property type. According to Marcus & Millichap, increased workplace attendance has contributed to the absorption of more than 127 million square feet of office space since March 2024, with private investors accounting for about half of recent buyers. The combination of reduced competition and resuming growth should help keep office vacancy rates in check, improving the appeal of office investment for investors able to navigate market nuances. Industrial real estate, by contrast, is undergoing a recalibration after an aggressive building cycle. Marcus & Millichap notes that a major wave of construction has effectively doubled industrial vacancy, with most of the empty space concentrated in larger properties and select markets. Even so, industrial investment remains active, supported by cap rates that have stabilized in the upper‑6 percent range and by the asset class’s long-term demand story. The firm notes that if trade policy stabilizes, it could generate sufficient new demand for space to curb the recent upward trend in vacancy rates.