12 — October 2026 — Appraisal — Financial — M id A tlantic Real Estate Journal
www.marej.com
A ppraisal By Jay White, MAI, CRE ® , Apex Realty Advisory U.S. National Commercial Real Estate Summary Q2 2026
T
elevated interest rates, rising operating costs, and chang- ing sector demands. There are several factors that all involved, particularly apprais- ers, should keep a close eye on. First are macroeconomic trends: GDP, demographics, unemployment, consumer/ business spending, and infla - tion. Each of these drives busi- ness expansion or contraction and can impact real estate de- mand for office, multi-family, industrial, or retail space. The facts are: • GDP grew at 2.5 percent in Q1 before slowing to 2.2
percent in Q2 • The labor market’s em - ployment rate averaged 4.3 percent in Q1-Q2 reflecting a “low hire, low fire” dynamic • U.S. consumer spend - ing increased by 0.9 percent month-over-month and 4.5 percent annually in Q2 • The annual U.S. inflation rate stood at 3.4 percent for the 12-month period ending in August 2026 Consumer spending is about 69 percent of the entire U.S. economy, so growth and con- fidence is important. Discre - tionary spending continues to
he macroeconomic backdrop in the sec- ond half of 2026 looks
provide a steady foundation for this growth, but elevated inflation and surging gas pric - es have weighed on household purchasing power. Energy price shocks in 2026 have driven up inflation, though Q3 inflation pressure appears to be moderating. Commercial real estate can be a hedge to inflation, though real pro - tection depends on whether lease rollovers increase to market and turn into positive cash flow. Second are the market fun- damentals of supply and de- mand. New supply has been
constrained due to elevated construction and borrowing costs and overbuilding in some markets. Restrictions on new construction pipelines have given more time to ab- sorb excess space. Within the office sector in particular, demolitions and conversions to other uses are helping balance out excess supply of obsolete buildings. Steady absorption of space is help- ing support rent growth and driving income gains. Third is the availability and cost of capital. Interest rates are the primary driver for prop- erty pricing and market activ- ity. Since March, the 10-year Treasury has climbed above 5.2 percent – the first time in two decades. The Federal Re- serve recently decided to hike its benchmark rate by 25bps from 3.75 to 4 percent, which is the first hike since July 2023. Policymakers have signaled another increase could come this year as inflation remains elevated. The Fed now projects a return to its two percent infla - tion target in 2029. According to the MBA, commercial and multifamily mortgage loan originations were 16 percent higher in Q2 compared to the year prior and are up 12 per- cent from Q1. The capital mar- kets are not closed but are in- creasingly more discriminant. Asset repricing over the past few years has largely found a floor as price adjustments have absorbed prior rate hikes rather than tumbling fur- ther. Pressure is building as commercial real estate loans mature, which adds another layer of uncertainty with ris- ing borrowing costs. Capital deployment is increasingly targeting assets with strong fundamentals and long-term growth potential. In conclusion, we have a tight labor market with sturdy consumer balance sheets, how- ever with slowing wage growth and higher borrowing costs all are feeling strains. Higher bond yields may cause com- mercial real estate pricing ad- justments and modify invest- ment strategies. Even with geopolitical, macroeconomic, and policy risks, some econo- mists see the U.S. economy as resilient in a higher interest rate environment. Jay L. White, MAI, CRE ® , is the founder of Apex Realty Advisory in Wilmington, DE. MAREJ
like nothing it did at the start. Eco- nomic uncer- tainty, rising energy costs, inflation, and higher cost of capital are causing mar-
Jay White
ket participants to scramble to efficiently navigate the landscape. The commercial real estate industry is facing fluctuating economic shifts,
Jay L. White, MAI CRE® 101 Brandywine Boulevard Wilmington, DE 19803 P: 302-479-5300 www.apexrealtyadvisory.com
O UR Q UALIFICATIONS
O UR S ERVICES
• Real Estate Appraisal
o Expert valuation of commercial properties for lending, divorce, eminent domain, conservation, partnership buyouts, etc. o We provide critical thinking, analysis, and advisory • Market Feasibility and Market Studies o Market financial analysis to better evaluate development options • Counseling Services o Appraisal review, arbitration, expert witness testimony, real estate tax appeal, loan workout, dispute resolution, and litigation support o Analysis of current market conditions and research into comparables for client internal asset management purposes • Real Estate Consulting • Acquisition Due Diligence
• Certified General Real Appraisers serving Delaware, Maryland, and Pennsylvania with 38+ years of appraisal experience • MAI designated real estate appraiser • CRE® Counselor of Real Estate o Awarded to real estate practitioners recognized for their expertise, experience, and ethics in providing expert advice
P ROPERTY T YPES
• Retail • Office • Industrial • Institutional • Mixed-Use • Schools
• Multifamily • Land • Special Purpose • Hospitality • Self-Storage • Medical/Veterinary
• Estate Planning
o Retrospective and future planning o Appraisals to challenge tax assessments
• Real Estate Tax Appeal
Made with FlippingBook Annual report maker