Los Angeles CEOs Resigned To Elevated Rates For 2026

After two years of slow, measured interest rate declines, top Los Angeles commercial real estate leaders expect the coming year to bring little movement.

They are acting on that assumption, sharpening their strategies and making decisions as if stability is the new baseline.

"Those 2% and 3% interest rates are not the norm," Watt Capital Partners CEO Nadine Watt said. "We'll probably never go back to those rates." 

Rates will probably tick down a bit more following President Donald Trump's expected replacement of Federal Reserve Chair Jerome Powell after Powell's term ends in May, Watt said, but not enough to return the borrowing rate to historic lows.

"Certainly not what they were before '22," Watt said. "Sorry to all the millennials."

Trump last week nominated Kevin Warsh to replace Powell. Warsh must be approved by Congress before taking the position. 

The lowering of the federal funds rate, the rate that banks charge each other for short-term loans that allow them to meet reserve requirements, won't necessarily translate into a change in the longer-term rate, "which is really what drives our business," Lowe Co. co-CEO Mike Lowe said. 

"The expectation that things are going to change dramatically in '26 just isn't there," Lowe said. 

CEOs said they still saw a handful of opportunities as the market settles into a new normal. 

"The only green shoot I'm seeing right now is in retail," Watt said. "I think retail is back, and retail is the darling. Capital is going toward retail." 

Overall sales volume for high-street retail and grocery-anchored centers in greater Los Angeles increased by 9.5% last year to $4.2B, according to a CBRE report published in January. 

Interest in those two types of retail is expected to drive investment in 2026.  

Other CRE leaders saw opportunities in cities that were close to but outside of LA proper. Panelists held up policy failings, leadership vacuums, unfriendliness to business and reputational challenges to the city, especially Downtown, as reasons why businesses might choose to leave the city altogether. 

"I would love to see Los Angeles in general and Downtown LA come back strong and all that," Rising Realty CEO Christopher Rising said. "But I think it's going to be because the city council person recognizes, 'I just lost a business that went 10 miles away, and those jobs and that tax revenue went 10 miles away, and we don't get to have it. We better figure out policies to compete.'"

Rising was confident that missed opportunities for Los Angeles would be the thing that would kick-start the city to make changes toward a more business-friendly climate. 

Other leaders seemed similarly bullish on LA's ability to right the ship. 

"I think places like Orange County and San Diego are just easier to get things done, easier to do business," Lowe said. "I think LA is going to see that, and we're going to have to make changes. ... I think there will be a pendulum swing."