US investment and sales volumes saw an almost 15 percent increase in the first half of 2026, with no signs of stagnation. The previous week, the Federal Reserve raised interest rates by a quarter point and signalled a further increase later in the year. It does not seem long ago that the entire commercial property sector suffered under high interest rates, delaying major investments and transactions until the Fed would lower its benchmark rate from its 2023 peak of 5.25 to 5.5 percent.
To the relief of many, these rates fell to a low of 3.5 to 3.75 percent by December 2025, before the most recent hike brought them to 3.75 to 4 percent. Yet, even the lower interest rate in December was still significantly above the levels the industry had adapted to for many years until 2022, and which it now hoped to return to. This time, the higher interest rate is also accompanied by stubbornly high inflation.
Despite knowing about the probable interest rate increase, sentiment had noticeably changed. The reduced commotion surrounding interest rates reflected a resignation, followed by an adaptation. The relative calm was more the sound of an industry adapting to a changing world and new economic realities with surprisingly little fuss.
Robust Investment Activity in Uncertain Times
Given the news situation and recent economic developments, characterised by tariffs, the war in Iran, as well as persistently high interest and inflation rates that increasingly make instability the norm, the commercial property investment community could have been forgiven for burying its head in the sand and holding back its investment funds. But that is not what happened. Instead, commercial property investment activity behaved as one would expect in a much more stable economic and geopolitical environment.
A report by Avison Young showed that investment and sales volume for the first half of 2026 totalled $233.6 billion. This represents a 14.7 percent increase compared to the first half of 2025 and marks the "strongest first half since 2022". The total volume for the first quarter of $120 billion marked a 25.5 percent year-on-year increase and was the highest first-quarter result in four years.
A report by JLL published in August 2026 noted that "global direct investments entered the second quarter with strong momentum" and emphasised that "activity in North and South America increased by 26 percent, with the US showing strong performance". The question is why a period of such global turmoil and economic uncertainty has so far seemingly had little impact on commercial property investments.
Redefining Stability and Investor Behaviour
It could be that, given the many rapid, world-shaking events, instability has become the new stability. Jay Neveloff, Partner and Head of US Real Estate Business at the law firm HSF Kramer, believes that part of the answer lies in the definitions of stability that commercial property investors seek, starting with the Fed's 2 percent inflation expectation. He stated that the entire concept of a 2 percent guideline makes no sense in our nuanced world. He referred to current wars and oil prices beyond $100 per barrel as uncontrollable factors not addressed by the Fed's actions.
Neveloff is of the opinion that, unlike recent years when there were widespread calls for interest rate cuts, the relevance of interest rates for the investment community as a whole has decreased, at least concerning quarter- or half-point adjustments. He emphasised that the investors he speaks with do not consider spreads of 25 or 50 basis points. Instead, they focus on whether they like the asset, see value in it, and believe that the value will increase. They consider the potential exit strategy and are learning not to be guided by forecasts anymore.
One reason for this shift in perspective, according to Neveloff, is the expansion of the entire investment economy. According to the Federal Reserve, the net worth of households and non-profit organisations increased by $12.8 trillion in the second quarter of 2026. Yahoo Finance characterised this as the eleventh consecutive quarter of gains, which increased household balance sheets by $43.4 trillion and boosted cumulative wealth creation since the 2020 pandemic to $83.9 trillion.
- —More disposable income and wealth creation leads to higher investment needs.
- —Investors are less influenced by interest rates when they need to deploy capital.
- —The low interest rates of the past are considered obsolete; investors accept higher levels.
A report on private equity by Bain & Company from February 2026 also referred to a "mountain of available capital", with "global dry powder" (uninvested capital) at an impressive $1.3 trillion. Neveloff explained that this large amount of available money must be invested somewhere, which promotes continued investment activity. He said there was more disposable income, more wealth created, and more money invested than ever before.
Neveloff called the low interest rates of the past "dinosaurs" and said that investors who understand that interest rates will probably never be as low as they were five or ten years ago are moving forward with full force. The alternative would be permanent inaction. He is convinced that interest rates no longer significantly influence the decisions of truly smart investors. Those who are closing deals now are opportunistic. If 50 basis points determine the realisation of a deal, it is not the right deal. He believes that prudent equity investors ...
