Interest Rates are creating fresh uncertainty for commercial real estate (CRE) brokerages as they approach the final quarter of the year. After a strong run through much of 2026, major firms are now reassessing their capital markets expectations. Sharp movements in 10-year Treasury yields have affected financing conditions, delayed transactions and forced some buyers and sellers to reconsider their plans.
The 10-year Treasury yield climbed above 5.3% in early October before easing to approximately 4.8%. However, the changing outlook has made it harder for brokers to predict which deals will close before the end of the year. During their third-quarter earnings calls, executives described a market where financing costs and uncertainty are influencing decisions across several property sectors.
CBRE CEO Bob Sulentic addressed the pressure during the company’s October 22 earnings call. He said higher capitalization rates were causing some deals already under contract to be renegotiated. Other transactions that might previously have moved forward were no longer progressing. In some cases, owners were also choosing refinancing over property sales.
Interest Rates Put Fourth-Quarter Deals at Risk
The final quarter is particularly important for commercial real estate brokerages. Historically, it has generated around 30% of annual capital markets revenue. December alone typically accounts for approximately 15% of full-year activity, according to JPMorgan Chase analysts in a note published in mid-October.
That seasonal importance makes the recent Interest Rates volatility especially challenging. JPMorgan analysts believe some disruption across CRE capital markets is highly likely. They also expect CBRE, JLL, Cushman & Wakefield and Colliers to experience a meaningful negative effect on fourth-quarter revenue.
Nevertheless, the analysts believe the expected decline will be more limited than during previous capital markets downturns. Their revised forecasts reflect a slowdown rather than a complete collapse in transaction activity.
The analysts lowered their projections for fourth-quarter investment sales and mortgage origination revenue. They now expect flat year-over-year growth, compared with their earlier forecast of 10% growth.
Their outlook for 2027 is more cautious. They expect revenue to fall 20% year over year in the first quarter, followed by a 10% decline in the second quarter. Activity is then projected to remain flat in the third quarter before returning to 10% growth in the final quarter.
Interest Rates Versus Property Fundamentals
JPMorgan Chase Executive Director Anthony Paolone said the current situation differs from earlier market downturns. In previous cycles, financing problems often occurred alongside weaker leasing activity and deteriorating property fundamentals.
This time, the pressure appears more closely connected to borrowing costs. Paolone said the absence of a simultaneous leasing disruption could help the market adjust more quickly.
If Interest Rates are the main obstacle, investors and lenders may be able to recalibrate their expectations without facing a broader decline in property income. However, the situation would become more difficult if cash flows and the underlying performance of buildings also came under pressure.
That distinction matters for owners considering sales, refinancing or new acquisitions. Buyers may still have capital available, but changing borrowing costs make it harder to agree on property values. Sellers, meanwhile, may need to reconsider their pricing expectations to keep transactions moving.
Despite the uncertainty, several major brokerages have reported strong capital markets results for the first nine months of the year. JLL’s capital markets revenue increased 21% through September 30. Cushman & Wakefield reported a 10% increase over the same period, while Newmark recorded growth of 14.5%.
These figures show that the recent volatility has not erased the gains made earlier in the year. However, the outlook for the final quarter is becoming less certain.
Interest Rates Create Different Challenges for Brokers
For Marcus & Millichap, the instability in the market has become a bigger concern than the higher borrowing costs themselves. CEO Hessam Nadji discussed the issue during the company’s November 6 third-quarter earnings call.
He explained that if Interest Rates had risen and then settled at a sustainable level, the industry could have adjusted to the new conditions. Brokers, buyers and sellers would eventually have been able to establish expectations and move into another market cycle.
Instead, repeated changes have made planning more difficult. Nadji described the prolonged downturn as different from the cycles he had experienced since the early 1990s.
The distinction between high rates and unpredictable rates is important. A stable financing environment allows investors to calculate borrowing costs, estimate returns and negotiate with greater confidence. Frequent changes make those calculations less reliable, even when the underlying property remains attractive.
Consequently, some market participants are choosing to wait rather than commit to transactions while financing conditions remain unsettled.
More Listings, but Fewer Deals Progress
Recent market data also suggests that properties are entering the sales pipeline without necessarily moving toward completion.
According to Lightbox, average daily property listings increased 24% in September compared with August. However, activity further along the transaction process was weaker. Environmental site assessments and appraisals both declined.
Lightbox Research Director Dianne Crocker said this pattern suggests that more properties are being offered for sale, but fewer are progressing through underwriting and financing.
In other words, listing activity alone does not show whether the market is recovering. Buyers may be reviewing opportunities, and sellers may be testing demand, but transactions still depend on financing, due diligence and agreement on value.
Crocker said stability has become more important than the exact level of Interest Rates. A more predictable 10-year Treasury yield and clearer expectations about Federal Reserve policy could help buyers and sellers regain confidence.
However, continued movements in Treasury yields could make it harder for deals to reach closing. Investors need a reliable basis for calculating returns, particularly when borrowing costs have a direct effect on acquisition prices and financing structures.
More than 80% of traders were expecting a 25-basis-point rate hike at the Federal Reserve’s December meeting, according to CME Group’s FedWatch tool. That expectation adds another factor for investors to consider as they prepare their year-end plans.
Interest Rates Delay Year-End Transactions
Even during the peak of market volatility roughly a month ago, some brokers continued receiving calls from interested buyers.
Colliers Senior Vice President Tyler Ziebel, who works in the Chicago industrial market, said buyers were contacting him several times a week. Some had capital ready to invest and were looking for properties that met their acquisition criteria.
However, the timing of the Treasury yield movements created a problem. The volatility arrived at the beginning of the fourth quarter, when brokers typically want to launch transactions early enough to complete them before year-end.
Some deals were therefore placed on hold. Buyers and sellers initially expected to wait a couple of weeks before making decisions. As that period extended, however, some participants began considering whether it would be more practical to postpone transactions until the first quarter of 2027.
Ziebel said the situation was largely a matter of financial calculations rather than uncertainty about the underlying property market.
That distinction could influence the timing of transactions over the coming months. Deals may not have been abandoned permanently, but buyers and sellers could need more time to agree on financing and pricing.
For brokers, this creates a difficult end-of-year environment. They may have active conversations and qualified buyers, yet still struggle to convert that interest into completed transactions.
Some Brokerages Remain Confident
Not every major brokerage has adopted the same outlook. Several executives said their capital markets pipelines remain healthy despite the changing financing environment.
Cushman & Wakefield CEO Michelle MacKay said during the company’s November 4 earnings call that recent changes had caused minimal disruption to its capital markets pipeline. She also pointed out that multifamily, one of the sectors most sensitive to Interest Rates, accounts for less than 15% of the company’s capital markets revenue.
This limited exposure could help the brokerage manage pressure in the multifamily sector. Its broader business provides additional sources of revenue if one property category experiences a slowdown.
Colliers also expressed confidence in its business mix. Christian Mayer, the company’s CEO of Commercial Real Estate, said diversification across business lines could help protect the firm if another capital markets shock occurs.
Mayer said the company’s pipelines looked good for the fourth quarter. However, he acknowledged that growth would probably be lower than previously expected.
JLL CEO Christian Ulbrich offered a similarly measured outlook during the company’s October 28 earnings call. He said the firm remained confident that most capital markets deals planned for the fourth quarter would close on schedule rather than move into 2027.
Ulbrich also acknowledged that transaction timelines were becoming longer. Nevertheless, he said the pipeline continued to grow and that very few deals were actually collapsing.
JLL’s full-year guidance projects capital markets revenue growth in the mid-teens. That forecast implies fourth-quarter growth ranging from flat to low single digits.
Ulbrich described the outlook as cautious because higher Interest Rates have made the market less predictable. Still, the company does not expect most of its planned transactions to disappear.
Interest Rates Shape the 2027 Forecast
Newmark has presented one of the more cautious outlooks among the major brokerages. During its October 29 third-quarter earnings call, Chief Financial Officer Michael Rispoli said the company expects industry capital markets volumes to remain under pressure through at least the first half of 2027.
He linked that expectation to both the higher level of Interest Rates and the volatility surrounding them.
Rispoli outlined a downside scenario in which continued Treasury yield increases and prolonged uncertainty could push capital markets activity down by approximately 20% to 30%. Under a more positive scenario, the market could experience some weakness during the first half of the year before improving in the second half.
The wide range reflects how difficult it has become to forecast transaction volumes. A stable financing environment could support a faster recovery, while continued volatility could cause investors to delay acquisitions and refinancing decisions.
Keefe, Bruyette & Woods Managing Director Jade Rahmani questioned whether Newmark’s downside scenario was too severe. He pointed to improving office fundamentals and the growing secondary use of industrial properties for storing data center components.
Rispoli responded that the company had presented a broad range because market outcomes remained uncertain. He said Newmark’s base case assumed conditions would improve and that the company could still have a strong year.
The different forecasts show how differently firms are interpreting the same market signals. Some expect a temporary slowdown, while others are preparing for a more prolonged reduction in transaction activity.
Selective Investors Wait for Stability
The outlook among property investors also reflects a mixture of confidence and caution.
Gordon Black, who has worked at Heitman for nearly four decades, manages an open-ended core-plus fund for the company. He described global real estate fundamentals as excellent but said Interest Rates would determine when transaction volumes could recover.
Black remains willing to invest, but he is being selective about where the fund deploys capital. He said the market remains difficult to navigate, even for investors with money available for acquisitions.
That approach reflects a wider challenge across commercial real estate. Available capital does not automatically translate into completed transactions. Investors must still assess financing costs, property values, potential returns and the risks of waiting.
Some buyers may find opportunities as sellers adjust their expectations. Others may prefer to hold their capital until Treasury yields become more predictable.
The result is a market where interest remains present, but decisions are taking longer.
Interest Rates Affect Property Sectors Differently
The impact of financing volatility is not equal across all commercial real estate categories.
Rahmani said multifamily is particularly exposed to rate-driven valuation changes because it generally trades at lower capitalization rates. When financing costs rise, properties with lower cap rates can face greater pressure on their valuations.
Office properties have already experienced a substantial adjustment in capitalization rates. According to Rahmani, those higher cap rates may provide some protection against further increases in borrowing costs.
This does not mean office properties are immune to market pressure. However, their valuations have already adjusted significantly, giving some assets more room to absorb changes in financing conditions.
Industrial real estate also has factors supporting its outlook. The potential use of industrial properties for data center component storage is creating additional interest in certain assets.
KBW is beginning to model low- to mid-single-digit declines in fourth-quarter transaction volumes. The firm then expects gradual improvements throughout 2027.
Rahmani said the slowdown would probably become more visible in the first quarter of 2027, even if some weakness begins to appear during the final months of 2026.
These differences between property sectors are important for investors deciding where to allocate capital. Multifamily, office and industrial assets do not face the same valuation pressures, and their performance may vary as financing conditions change.
Prolonged Volatility Could Affect Employment
The pressure from changing Interest Rates may eventually extend beyond transaction volumes and property valuations.
Rahmani said he had observed some headcount reductions at companies, although he had not yet seen the same trend at brokerages. However, he warned that a prolonged period of volatility could eventually affect employment across the industry.
If transactions continue to slow, brokerage firms may face pressure on commissions and revenue. Companies could then reconsider staffing levels and operating costs, particularly if the market remains weak into 2027.
For now, the situation remains uncertain. Some firms still have strong pipelines, buyers continue to look for suitable assets, and investors have capital available. Nevertheless, longer closing periods and changing financing assumptions are making it harder to complete deals on schedule.
The next several months will show whether the recent volatility represents a temporary interruption or the beginning of a deeper slowdown. For CRE brokerages, the direction and stability of Interest Rates will remain central to their fourth-quarter results and their expectations for 2027.
