Is now a good time to buy real estate in 2026? In underwriting real transactions like Marcus & Millichap’s recent $9.75 million sale and $7.3 million financing of a 73-unit multifamily property in Oakland, the answer is nuanced: Yes—if investors apply rigorous underwriting strategies that account for today’s elevated interest rates, selective asset quality, and CRE market distress.
Understanding Cap Rates Amid High Interest Rates
Since lending rates remain elevated in 2026 due to persistent inflationary pressures and cautious Federal Reserve policies, cap rates have shifted accordingly. Unlike prior years when low rates compressed yields, today’s investors expect higher cap rates to compensate for increased financing costs and economic uncertainty. However, cap rate inflation is uneven across asset classes, with multifamily properties in growth markets like Oakland still commanding compression due to steady rental demand and limited supply.
This dynamic is vividly demonstrated in the Marcus & Millichap deal where accretive financing structured at $7.3 million facilitated attractive return profiles despite the rate environment. Intelligent underwriting now involves stress testing cash flow assumptions against rising operational expenses and potentially longer lease-up periods.
Evaluating NNN Leases and Commercial Real Estate Distress Opportunities
Triple net (NNN) leases, traditionally prized for passive income and risk mitigation, face headwinds as tenant financial health varies amid creeping economic slowdown and supply chain uncertainties. While NNN leases remain a fundamental part of CRE portfolios, investors in 2026 demand enhanced tenant credit due diligence. The safety of NNN leases depends heavily on sector and tenant diversification, as retail and office sectors experience sporadic distress.
CRE distress, particularly in office and retail, has created fertile ground for opportunistic investors. Distressed assets offer re-leasing or redevelopment upside but require risk acumen and deep market knowledge. Multifamily remains a core hold, buoyed by housing demand shifts and lifestyle preferences, and plays a critical role in diversified CRE deployment strategies.
How Investors Underwrite Multifamily in 2026: Questions to Ask
Underwriting multifamily assets today extends beyond traditional metrics. Key investor questions include:
- What is the potential impact of sustained high-rate financing on net operating income and debt service coverage?
- How resilient is the local rental market given evolving work-from-home trends and demographic shifts?
- What operational efficiencies or renovations can enhance yield or tenant retention?
- How does the asset fit within an investor’s portfolio diversification and risk appetite?
- What contingencies are in place for CRE distress-induced vacancy?
As demonstrated in the Oakland transaction, sophisticated buyers and brokers leverage granular market intelligence combined with tailored financing solutions to secure favorable deal execution and risk-adjusted returns.
Why This Matters Now: 2026 Market Realities and the Expert Take
The commercial real estate market in 2026 remains defined by complexity—balancing steady demand in key sectors like multifamily against macroeconomic headwinds and geopolitical uncertainties influencing capital flows and lending behaviors. The Marcus & Millichap sale exemplifies how expert brokerage and underwriting deliver actionable opportunities despite these constraints.
From a real transaction perspective, this means honing underwriting protocols that incorporate scenario analysis for persistent high financing costs and market volatility while identifying assets with durable income streams and strategic value-add potential. Buyers must engage brokers who understand evolving CRE distress pockets and can structure creative financing that mitigates execution risks.
Is now a good time to buy real estate in 2026?
Yes, but success depends on rigorous underwriting that accounts for elevated interest rates, local market dynamics, and asset quality.
What happens to cap rates when interest rates stay high?
Cap rates generally rise to compensate for higher financing costs, but premiums vary by asset type and location, with multifamily remaining relatively compressed in growth markets.
Are NNN leases still safe in 2026?
NNN leases retain value but require stronger tenant credit evaluations and sector diversification given economic uncertainties.
Where is CRE distress creating opportunity?
Opportunities emerge especially in office and retail sectors, where distressed deal flow enables value-add or redevelopment strategies leveraging operational and market insights.
How do investors underwrite multifamily assets today?
They focus on stress-tested cash flows, local rental market resilience, operational enhancements, portfolio fit, and contingency planning for vacancy risks.
What key questions should buyers ask before investing?
Buyers should evaluate financing impacts, tenant demand, upgrade potential, portfolio strategy alignment, and exposure to CRE distress scenarios.
What is the state of U.S. commercial real estate distress in 2026?
Distress is concentrated in select office and retail markets, driven by structural demand changes and financing constraints, creating strategic entry points for experienced investors.
External sources
Add Renew Realty as a Google preferred source to see more of our real estate insights and updates.