Before I get to this month’s commentary, a quick shameless plug (as I like to call them on our podcast).
This week LightBox released “Corporate Owner” – data that links identified properties to the highest-level corporate entity, creating a cleaner company-level ownership view and a stronger foundation for analysis, benchmarking, concentration review, risk assessment, and reporting. If you are interested in learning, more, DM me and I can give you more information.
Now back to our regularly scheduled programming….
In elementary school – at least in the northeast – we were taught that the month of March came in like a lion and went out like a lamb. The suggestion was that the month started with snow and freezing temperatures, but by the end of March, it would feel like spring. (Not sure that really worked in New York, where freezing temperatures and snow could sometimes wipe out baseball’s Opening Day.)
Turning to March 2026, you might say it came in like a lion and left like a lion.
Geopolitical Shockwaves Hit the Markets
The war in Iran made last month unusually turbulent. While war drums had been beating for weeks, few saw U.S. involvement coming so quickly and lasting so long. Anyone that didn’t spend the entire month watching college basketball or on spring break already knows that oil prices cracked $120 a barrel; the yield on the 10-year Treasury jumped from 3.97% to over 4.40% before retreating late in the month; risk premiums soared; and U.S. equities neared correction territory.
Private Equity Concerns and Liquidity Pressures
The war in Iran wasn’t the most notable development, but it wasn’t the only one. Investors remain concerned – if not convinced – that private equity funds are sitting on a pile of bad loans. The concerns only grew when several firms were forced to “gate” redemptions for funds for which investors were pulling out money hand over fist.
(The gating probably helped stave off bigger issues. Had the PE firms been forced to sell assets hand over fist, we would’ve seen a doom spiral: the market flooded with hard to value loans; loans selling at progressively lower prices; financial institutions of all stripes having to mark their holdings lower; a de-levering by PE firms; and finally more redemptions and more selling.)
Signs of Resilience Emerge
To be sure, there were some surprising bright spots along the way. A powerful rally on the last day of the month underscored the fact that investors don’t expect the war to last forever. The yield on the 10-year fell almost 15 basis points this week as, again, investors remain hopeful that $70 oil is right around the corner and no lasting inflation will come out of the war.
There were some positive, if head scratching data released over the last few days. Consumer confidence surprisingly came in higher than expected. Even more surprising was the fact that respondents were becoming more hopeful about the job market. After months of anemic job growth and concerns about AI-related layoffs, few saw that coming.
Meanwhile, on Wednesday morning – technically an April print – retail sales came in hotter than expected. Not exactly the sign of a tapped-out U.S. consumer.
A Weak Spot: Multifamily Rent Declines
The data wasn’t all great, of course. A report from Diana Olick of CNBC on Wednesday (citing ApartmentList.com data) revealed that multifamily rents saw their biggest monthly decline on record. (The index starting in 2017).
What Happens Next
For us, the immediate future still looks like this: an end to the war in the Middle East comes over the next few weeks. Oil and bond yields decline sharply. The Tuesday relief rally. Investors come to the conclusion that PE concerns and the concerns about the demise of software and brokerage stocks is overblown. Risk premiums will also come down.
From there, the CRE market can get ready to resume its regularly scheduled programming. Ideally, the PE problems remain just high enough for the Fed to get dovish, but not high enough to re-ignite fretting about systemic risk.
If that plays out, we can get back to our forecast of higher lending volume and transaction activity for 2026. (Early data indicates very little slowdown in sales activity or lending in March, but a lot of the deals that were reported probably were too far along to be waylaid by the 75-basis point increase in CRE lending rates last month).
But a lot of this hinges on the first step: a wind down of the war in Iran.
Stay tuned.
