It's Fed week, and last week's top stories left little doubt about where policy is headed. With inflation still sticky, expectations have coalesced around a pause. At the same time, regional banks began signaling a renewed appetite for CRE lending in 2026, offering an early indication that confidence is starting to return in selective parts of the market.
From the Desk of Logan Freeman | Midwest CRE Advisors |Kansas City
If you're a commercial real estate owner in the Midwest and you've been sitting on the sidelines waiting for the right time to sell—or if you're an investor who's been holding dry powder through the correction—this is your wake-up call.
The green flag is out.
After nearly three years of capital markets paralysis, regional banks are signaling a renewed appetite for CRE lending in 2026. At the same time, institutional investors have amassed $250 billion in dry powder targeting North America—the largest capital reserve ever assembled in commercial real estate.
Transaction volumes are accelerating. Bid-ask spreads are narrowing. Pricing is stabilizing.
The question isn't whether the market is recovering. The question is: Are you positioned to act?
Let's rewind.
In 2022, the Fed launched the most aggressive rate-hiking cycle in 40 years. The 10-YearTreasury went from 1.5% in January 2022 to 4.5% by December 2022.Regional banks—who are the lifeblood of financing for secondary and tertiary Midwest markets—pulled back hard.
By 2023, the market hit a wall:
● Transaction volumes plummeted 45% from the 2022 peak (~$800B to ~$450B)
● Bid-ask spreads widened to 20–25% as buyers and sellers couldn't agree on valuations
● The regional bank crisis (SVB, Signature Bank, First Republic) further tightened lending
● Office distress accelerated, and CMBS spreads blew out
It was a pricing reset—and it was brutal.
2024 wasn't much better. Volumes stayed flat around $450–$475B.The Fed paused rate hikes, but regional banks remained cautious. Sellers who needed to transact faced a buyer's market. Those who could afford to wait…waited.
Then, in 2025,everything shifted.
Here's the data:
Transaction Volume Recovery:
● U.S. CRE transaction volumes up +17%year-over-year through Q3 2025 (Principal Asset Management, MSCI Real Capital Analytics)
● Q3 2025 alone: +17%YoY growth
● Trailing12-month volume (through October 2025): $138.3B, up 27% YoY (CoStar)
● Number of transactions >$10M reached the highest quarterly count since 2022 (Altus Group)
Lending Activity Exploded:
● CRE loan originations up +47% YoY through Q3 2025
● Regional banks re-entering the market for the first time since 2022
● CMBS spreads tightening; life companies deploying capital
● Federal Reserve Senior Loan Officer Survey: CRE loan demand rose for the first time since Q1 2022
Property Pricing Stabilized:
● MSCI RCA CPPI (the industry standard for property pricing): +1.6% in November 2025—the first back-to-back annual gains since 2022
● U.S. Listed REITs: +4.5% YTD (through late 2025)
Capital Raised:
● $164.4 billion raised globally in 2025 (29%year-over-year growth)
● $115 billion targeting North America
● First annual increase in fundraising since 2021
The top fund sponsors in 2025?
● Brookfield Asset Management: $16B raised
● Blackstone:$19B combined funds
● Carlyle: Record opportunistic fundraising
Combined, Brookfield and Blackstone alone contributed 16% of all CRE capital commitments in 2025.
Here's the reality: 2026 is a cycle for selectivity.
Not all asset types are created equal. The market is bifurcating into winners and losers—and if you're on the wrong side, you'll get left behind.
✓ Industrial (especially small-bay<50,000 SF): +26.5% YoY transaction growth in 2025
✓ Grocery-anchored retail: Double-digit gains; necessity-based demand is durable
✓ Datacenters: 37% of all CRE capital raised in 2025 (up from 2% the prior year); AI/cloud computing demand driving unprecedented growth
✓ Medical office: 7–9% vacancy vs. 14%for conventional office; aging demographics + healthcare utilization trends
✓ Alternative assets (self-storage, senior housing): Recession-resistant cash flows; demographic tailwinds
✗ Commodity office: Flight-to-quality accelerating; Class B/C suburban struggling
✗ Oversupplied Sunbelt multifamily: Phoenix, Austin, Nashville, Tampa facing rent pressure
✗ Highly leveraged assets facing refinancing risk: $1.5 trillion in CRE loans maturing 2024–2027
If you're operating in secondary Midwest markets, you have a structural advantage right now.
Here's why institutional capital is flowing to the Midwest:
● Lower entry costs: Pricing hasn't recovered to 2021 peaks, so buyers are getting better risk-adjusted returns
● Stable employment and population fundamentals: No oversupply issues like the Sunbelt
● Less competition than gateway cities: Easier to underwrite value-add opportunities
● Regional banks are relationship-driven: Faster closes, local decision-making, 65–75% LTV available for quality assets
Midwest-specific opportunities to target:
● Small-bay industrial (<50,000 SF) in secondary markets
● Grocery-anchored retail with 3+ years of anchor term remaining
● Medical office near hospital systems or ambulatory surgery centers (ASC clusters)
● Value-add multifamily in stable Midwest metros (avoiding oversupplied Sunbelt)
● NNN single-tenant with investment-grade or near-investment-grade credit
The market is telling you something. Are you listening?
If you're a property owner:
● Liquidity is returning. If you've been waiting to sell, 2026 may offer the best exit window since 2021.
● Pricing is stabilizing. Bid-ask spreads are narrowing from 20%+ in 2023 to 5–10% today. Buyers are deploying capital. Sellers are adjusting expectations.
● Quality matters more than ever. Institutional capital is prioritizing strong tenant credit, lease term remaining (3+ years ideal), below-replacement cost basis, and necessity-based use cases (grocery, medical, industrial).
If you're an investor:
● Opportunistic buyers have the advantage. With $250B in dry powder and loan maturities creating motivated sellers, 2026–2027 will reward patient capital.
● Industrial and retail are leading the recovery. Focus on smaller, operationally efficient assets with NNN structures.
● Data centers and alternative assets offer differentiation. If you can access these sectors, institutional capital is chasing exposure.
● Core allocations are coming back. Stabilized, cash-flowing assets will see renewed demand as institutional investors rebalance portfolios.
2026 is shaping up to be a pivotal year for commercial real estate.
With rates likely higher for longer, the market is rewarding necessity-based sectors, durable cash flows, and top-quartile assets. Commodity office, oversupplied multifamily in select Sunbelt markets, and highly leveraged assets facingre financing risk are getting crushed.
Institutional capital is ready to deploy. Regional banks are returning. Transaction velocity is building.
The question is: Are you positioned to act?
I'm actively working deals across the Midwest in industrial, retail, medical office, and multifamily. Whether you're buying, selling, or positioning your portfolio for 2026, I can help you navigate the market and capitalize on the opportunities ahead.
Logan Freeman
Partner| Midwest CRE Advisors
573-694-9669
Logan@MWCREAdvisors.com
LinkedIn
● Principal Asset Management: 2026 Inside Real Estate Outlook
● MSCI Real Capital Analytics (RCA): CPPI November 2025
● CoStar, Altus Group, CBRE, Avison Young
● Federal Reserve Senior Loan Officer Opinion Survey (2025)
● PERE Fundraising Analysis (2025 Annual)
Copyright 2026, Midwest CRE Advisors
