Diverging Benchmarks Create a Split Screen for CRE Financing

Data from Altus Group’s first-quarter 2026 survey of commercial real estate (CRE) borrowers and lenders point to a market pulled in two directions. Treasury yields rose modestly, pushing fixed-rate all-in costs higher for borrowers, but the Secured Overnight Financing Rate (SOFR) continued its descent, delivering meaningful relief on the floating-rate side. The split reinforces a theme that has defined the past several quarters: The path to cheaper financing depends heavily on to which rate it is benchmarked. Adding to the uncertainty, the Federal Reserve (Fed) held rates steady at its first two meetings of 2026, and the path forward has only grown murkier as rising energy prices from the Middle East conflict cloud the inflation outlook and push the timeline for any further cuts into question. Meanwhile, quote activity rebounded sharply from the fourth quarter, and spreads moved in divergent directions across property types, with office seeing notable spread compression and retail spreads widening.

The full report provides data on quoted interest rates by property type, loan type, maturity and loan-to-value ratio, including for both senior debt and mezzanine loans.  

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