'A Generational Opportunity': Boston CRE Investors Prepare For A 2026 Reset

Boston’s CRE market in 2025 was full of capital restraints and a stalled development pipeline.

But experts at Bisnow’s Boston State of the Market event said 2026 could fare better given limited supply, increased lending activity and more distress-driven opportunities.

“There's a very heavy undersupply in a lot of markets for a lot of asset classes,” Taurus Investment Holdings Chief Investment Officer Bill Garey said at the event, held at Hines' South Station Tower. “I think the dynamics look much better going into '26 just from a fundamentals perspective.”

The multifamily sector continues to see a severe imbalance in supply and demand with housing stock significantly depleted, said Michael Procopio, CEO of The Procopio Cos. 

Although multifamily development remains challenging, Boston still continues to post positive rent increases when compared to Sun Belt markets that have overbuilt since the pandemic.

“Boston is the most radically undersupplied, structurally, and has the hardest growth path out of that undersupply over pretty much every other market,” Procopio said.

Though there has been a push in the Healey administration to build new housing, the Commonwealth may still struggle to reach its goal to build over 222,000 new housing units by 2035. 

On paper, at least, the pace so far has been good. In roughly the last five years, the state’s housing stock increased by nearly 98,000 units. To reach the 220,000 goal, the state would need to average a little over 12,000 of additional homes per year between now and 2035, according to The Boston Foundation's 2025 Greater Boston Housing Report Card.

However, only 5,456 building permits were granted for housing projects year-to-date across Massachusetts. That is a 44% decrease below 2021 numbers, according to the housing report card.

Capital for multifamily projects was tough to come by, Procopio said. Developers expected more capital to enter the market than actually did. Much of the capital that did flow was to deals with little to no risk.

“Those deals had to be perfect,” Procopio said. “They had to check every box. They had to be completely de-risked, or the institutional capital was not interested.”

Overall, several experts said lending has picked up in recent quarters with debt funds and banks seeing more activity. Money tied up in past investments is reentering the markets as a wave of loans mature, Boston Realty Advisors founder Jason Weissman said.

Across the country, commercial real estate lending was up 85% this year, reaching $227B, according to Newmark's Q3 capital market report. Banks made up roughly 38% of all CRE lending year-to-date.

“The banks are coming back really strong right now, and there's lots of liquidity, and I think it's through recycling,” Weissman said.

Berkeley Investments Senior Vice President Elizabeth Mahoney said in the last few months, liquidity presented a potential bright spot for future development.

“We have seen more project-specific equity become available,” Mahoney said. “I wouldn't say we're there, but we're moving in the right direction.”

The Massachusetts industrial sector has taken a beating postpandemic, but it has seen a solid year in terms of leasing activity. This may be a positive sign that the industry is finally stabilizing. 

Industrial vacancy decreased to 7.6% in the third quarter with 3M SF of total leasing activity, according to CBRE.

Earlier this week Quebec-based GSC Technologies signed one of the largest industrial leases of the year. The company will occupy 231K SF at Arris Partners' 175 Pioneer Drive in Leominster, Boston Business Journal reported.

Coming off of the large demand requirements from the pandemic, development in the space has fallen off with several large requirements poised to propel the market in the coming year.

“I do think we see a similar thing happening there with supply really drying up,” Taurus' Garey said.

Both the industrial sector and the multifamily sector may have been saved from the worst of the glut of oversupply that places like the Sun Belt have experienced, Cabot, Cabot & Forbes Chief Investment Officer Daniel Nagler said.

That’s because many Massachusetts' municipalities create such high barriers to entry for development.

“One of the saving graces for Boston is it's not easy to build here because of the permitting process, height limits, all these different things,” he said. “It has saved us on this macroeconomic level.”

More distress is expected to play out in 2026 especially within the office and lab markets, Weissman said.

There have been several notable buildings pushed into foreclosure auctions by lenders in the last couple of years including One Lincoln in downtown Boston and a Wellesley life sciences building.

“There's been a lot of kicking the can down the road,” Weissman said. “At this point, we're definitely seeing lenders be active with foreclosure proceedings … and I think we're gonna see a lot of that in 2026.”

Weissman said he expects more distressed deals to take place as asset valuations continue to correct.

“This is a generational opportunity to buy Boston at a reset basis,” Weissman said. “Yes, there are headwinds but for the long term the city continuously makes incredible transformations.”