Parkview Insights: 2026 Outlook
- Parkview Financial
- 3 days ago
- 6 min read
Parkview Insights | Market Trends & Updates
Paul Rahimian, Founder, CEO | Ted Jung, Chief Credit Officer | Dhaval Parikh, Managing Director, Head of Capital Raising & Investor Relations | January 2026
As we look ahead to 2026, we believe the U.S. economy is continuing to experience a period of significant transition with monetary policy, fiscal priorities, and capital markets all shifting at once. For commercial real estate lenders and developers, these changes will reshape the cost of capital, underwriting standards, and the pace of new construction. In particular, we believe these conditions will result in reduced short‑term rates and higher liquidity—both of which will favor selective, disciplined new development and refinancing activity.
Below, we outline the five macro forces we believe will define 2026—and what they mean for the commercial real estate industry.
1. The End of QT and the Quiet Return of QE
Quantitative tightening (QT) is effectively over. Beginning December 1, 2025, the Federal Reserve halted balance‑sheet runoff, and by mid‑December 2025, the Fed’s Reserve Management Purchases (RMP) program was in full swing. These purchases—roughly $40 billion per month in Treasury bills with maturities of three years or less—are designed to “maintain ample reserves” in the banking system. In practice, this is quantitative easing (QE) by another name.
At the same time, regulators are signaling a willingness to lower reserve requirements for commercial banks, a form of deregulatory easing that increases lending capacity without the political baggage of traditional QE. The Treasury is also expected to rely more heavily on short‑term T‑bill issuance to refinance maturing long‑term debt and mortgage‑backed securities.
The combined effect of these factors is that M2 money supply will begin rising again, reversing the contractionary trend of the past two years and reintroducing liquidity into the financial system. For real estate, this will mark the first meaningful improvement in capital availability since 2021.
2. A Dovish Turn at the Fed and a Lower Fed Funds Rate
2026 will also bring new leadership at the Federal Reserve. Jerome Powell’s term ends in May, and the as-yet-unnamed incoming chair—expected to be more dovish—will likely accelerate the shift toward easier monetary policy.
While the Fed’s official dot plot still shows only one cut in 2026 and one in 2027, we see that as increasingly unrealistic. Rising unemployment, slowing wage growth, and political pressure for lower borrowing costs will push the Fed toward a more accommodative stance. Taken together, we believe the market may ultimately move toward three to four rate cuts, totaling a 75–100 basis point reduction.
The transition period will be messy. With a “shadow chair” influencing expectations as early as February 2026, dissent among the twelve governors may increase. The next chair will need to project unity and independence even as fiscal and monetary policies become more intertwined.
Lowering the short end of the curve will be more accommodative for commercial real estate financing. It also serves a fiscal purpose: reducing the government’s interest burden at a time of elevated deficit spending. The long‑term inflation consequences will be left for another day.
3. A Steeper Yield Curve as Normalization Continues
The Fed has been vocal about its desire to “normalize” the yield curve, and 2026 is likely to bring a more traditional upward slope. With the Fed Funds rate falling, the 2‑year Treasury could drop below 2.75%, aligning more closely with estimates of the neutral rate.
A steeper curve is historically associated with healthier credit creation and improved bank profitability—both supportive of commercial real estate lending.
4. The Stock Market Is Not the Economy
Equity markets have surged over the past year, but the gains have been narrowing and heavily concentrated in AI‑driven capex and a handful of mega‑cap names. Meanwhile, the real economy is weakening beneath the surface.
The labor market is deteriorating, with unemployment likely to reach 5% or higher. Bureau of Labor Statistics surveys and GDP estimates have been subject to frequent downward revisions, masking the fragility of the job market. This “K‑shaped” economy is disproportionately affecting middle‑income households whose real purchasing power has eroded under cumulative inflation since the pandemic. In contrast, high‑income households continue to spend, buoyed by stock market gains.
For real estate, this means muted rent growth, especially in workforce‑oriented sectors such as multifamily and retail.
5. Long‑Term Rates Stay Anchored Around 4%
In 2026, beyond its focus on the dual mandate of maximum employment and price stability, we believe the Federal Reserve will place greater emphasis on its often-overlooked responsibility to promote moderate long-term interest rates — what we view as its “third mandate.” We expect the 10-year Treasury yield to remain anchored near 4.0%, within a projected range of 3.75% to 4.25%.
While the Fed has limited direct control over long-duration yields, it can still influence the long end of the curve through targeted balance-sheet policies, including selective Treasury purchases and adjustments to reinvestment practices. This softer form of yield-curve management should help prevent long-term rates from rising too far, too quickly, even as fiscal deficits remain elevated.
Implications for Commercial Real Estate Lending
Taken together, these forces create a more favorable environment for developers and lenders—at least in the early and middle stages of the development cycle.
Construction and Bridge Financing Become More Accessible
With SOFR declining alongside the Fed Funds rate, short‑term borrowing costs will fall, improving feasibility for new construction and lease‑up projects. Liquidity returning to the banking system will also support increased loan originations.
Permanent Financing Remains a Wild Card
If inflation reaccelerates due to renewed stimulus, permanent loan rates could remain sticky. That’s more of a 2027 problem than a 2026 one, but it will influence underwriting today.
Underwriting Shifts Toward Income Stability
Cap rates are unlikely to compress in lockstep with falling short‑term rates. As a result: LTC and DSCR/Debt Yield will matter more than LTV; rent growth assumptions must remain conservative, and underwriting current net effective rents will continue to be the norm.
Capital Flows Return, but Discipline Remains
Even with easier monetary policy, lenders will remain cautious about asset quality, sponsor strength, and market fundamentals. The winners in 2026 will be projects with strong demand drivers, realistic rent assumptions, and clear paths to stabilization.
Parkview’s Strategy
For Parkview, our strategy in today’s environment is to take advantage of improving short‑term financing conditions while maintaining disciplined, fundamentals‑driven underwriting. Declining SOFR‑based borrowing costs and returning liquidity will support multifamily development, allowing Parkview to selectively finance strong sponsors in resilient markets with balanced supply. At the same time, uncertainty around long‑term permanent financing requires structuring loans around income stability—specifically, prioritizing LTC, DSCR, and debt yield over LTV, and using conservative rent assumptions tied to current net effective rents. Even as capital flows improve, Parkview will continue emphasizing asset quality, sponsor strength, and quality assets with clear paths to stabilization to achieve attractive risk‑adjusted returns.
Conclusion
2026 will be a year defined by transition: from QT to QE‑lite, from Powell to a more dovish Fed, from an inverted curve to a normalized one, and from a narrowly based equity boom to a more challenging real‑economy landscape.
For commercial real estate lenders like Parkview, the shift brings opportunity. Lower short‑term rates and rising liquidity will support new development and refinancing activity. But underwriting discipline will matter more than ever, as rent growth slows, and long‑term rates remain anchored rather than falling sharply.
By Paul Rahimian, Founder, CEO | Ted Jung, Chief Credit Officer | Dhaval Parikh, Managing Director, Head of Capital Raising & Investor Relations
Learn more about our lending programs and market insights, www.parkviewfinancial.com
This article is intended for general information purposes only and is not intended to offer investment advice or recommend investments. This article is not an offer to sell or a solicitation of an offer to buy securities. Parkview Financial 2015 Fund, LP (“Parkview Financial”) offers investments to qualified investors only under the terms of a Confidential Private Offering Memorandum (the “Memorandum”) that may be made available to prospective investors in accordance with applicable federal and state securities laws. The Memorandum contains information regarding the business of Parkview Financial and the risks of making an investment in Parkview Financial. Prospective investors are required to read the Memorandum and acknowledge the risks of investment before making any investment in Parkview Financial.