📉📈 “How the 10-Year Treasury Impacts Commercial Real Estate Pricing in 2025–2026” 📊🏢

🏦➡️🏢 “Why the 10-Year Treasury Is Quietly Repricing CRE Deals Across the Country” 💡📉

How the 10-Year Treasury Is Quietly Shifting CRE Pricing in 2025–2026

If you invest in commercial real estate, the 10-Year Treasury (10Y) is one of the most important numbers in your world — whether you track it daily or barely think about it.

Why?
Because the 10Y acts as the gravity of CRE pricing.

When it moves, everything from cap rates to loan terms to purchase prices starts shifting — sometimes subtly, sometimes dramatically.

Today’s market is experiencing exactly that.

🔍 Why the 10-Year Treasury Matters for CRE

Commercial real estate values are directly tied to borrowing costs, and borrowing costs are tied to benchmarks like:

·The 10-Year Treasury

·SOFR

·Commercial MBS spreads

·Bank risk premiums

Most permanent CRE loans — including:

·Life company loans

·CMBS

·Agency (Multifamily)

·Some bank products

— all price based on the 10Y plus a spread.

So when the 10Y jumps from 3.5% to 4.7%, the impact cascades:

👉 Higher interest rates

👉 Higher debt service

👉 Lower leverage

👉 Lower cap rate tolerance

👉 Lower buyer purchase power

And ultimately…

👉 Lower property values.

⚠️ What’s Quietly Happening in Today’s Market

Most investors feel the softness in pricing… but many don’t understand why.

Here’s what’s really driving it:

1. The 10-Year Treasury Has Stayed Elevated Longer Than Expected

Investors began 2024 expecting rapid rate cuts.
But inflation stayed sticky — and the 10Y stayed above historical norms.

That stability is creating:

·Softer valuations

·Reduced speculative buying

·Wider bid–ask spreads

This is especially true for:

·Office

·Tertiary markets

·Class B/C multifamily

·Stabilized industrial with low NOI growth

2. Cap Rates Are Repricing to Match Higher Financing Costs

Even if sellers haven’t accepted it yet, the market already has.

A property that traded at a 5.0 cap in 2022 when rates were 3%…
cannot trade at a 5.0 cap when rates are 6.5%.

Today’s spread no longer works.

This is why investors are insisting on:

·Cap rate expansion

·Seller credits

·Price reductions

·Assumable loans

·Creative financing

3. Debt Service Coverage Ratios Are Squeezing LTVs

Banks and non-bank lenders are protecting themselves by lowering leverage.

Instead of 75% LTV…
Many deals today qualify at 55%–65% LTV because DSCR doesn’t pencil.

That alone pushes prices down.

4. Certain Asset Classes Are Thriving Despite Treasury Volatility

Not everything is soft.

Some sectors are enjoying strong capital demand regardless of rates:

·Industrial & logistics

·Medical office

·Storage in primary markets

·Land in fast-growth corridors (Katy, Fulshear, I-10 West)

·Build-to-rent (BTR)

These asset classes are powered by demographic growth — not just cheap debt.

📊 What Smart Investors Are Doing Right Now

✔ Watching spreads, not just the 10Y

A 25 bps drop in spreads can matter more than a 10Y drop.

✔ Locking in early if rates dip

Treasury dips are happening in 48–72 hour windows.

✔ Targeting sellers with adjustable expectations

Especially in tertiary markets and office.

✔ Favoring high-growth metros

Texas remains one of the strongest.

✔ Using creative financing

Assumptions, seller carry, rate buydowns, bridge → perm strategies.

🧭 Bottom Line: The 10-Year Treasury Is Repricing CRE — Quietly but Powerfully

If you’re an investor, developer, or business owner, you must track the 10Y just like you track:

·Vacancy rates

·Rents

·Supply pipelines

·New construction costs

Because over the next 12–18 months…

The investors who buy when the Treasury dips will get the best pricing.
The ones who wait may miss the window.

https://www.houstonrealestatebrokerage.com/

https://www.houstonrealestatebrokerage.com/houston-cre-navigator

https://www.commercialexchange.com/agent/653bf5593e3a3e1dcec275a6

http://expressoffers.com/[email protected]

https://app.bullpenre.com/profile/1742476177701x437444415125976000

https://author.billrapponline.com/

https://www.amazon.com/dp/B0F32Z5BH2

https://veed.cello.so/FOmzTty6oi9

https://creplaybookseries.billrapponline.com

https://creplaybook.billrapponline.com/

© 2023-2024 Bill Rapp, Broker Associate, eXp Commercial Viking Enterprise Team