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2026 started out strong. Capital was coming back, transaction volume was improving, and the market seemed to be finding a floor. But now, the bond market is moving, 30-year yields have reached levels not seen since before the Global Financial Crisis, and billions of dollars in CRE loans are headed toward maturity. Sales fell 33% year-over-year in April as the Iran conflict worked through the economy.

Today, the industry is saying there’s “more to fix in ‘26.” 

Does this mean real estate is no longer in recovery, or is there still hope on the horizon? To answer this question, Bisnow Editor-in-Chief Mark F. Bonner spoke with Jim Costello, chief economist of real estate research at MSCI.

Costello said economic volatility has complicated things. 

“This is a new wrench thrown into the works,” he said. “Gone are the days when you can just assume that it will be a nice, stable structural environment and you can hold an asset for seven years and not have to worry — the money will just show up in your mailbox on a regular basis. There’s a lot more uncertainty in the world.” 

Despite the challenges, Costello said he believes the CRE industry is still in recovery. Whether it stays that way, however, will depend on what happens next. 

“[Investors] need to do more scenario planning these days, because that’s how you can deal with the growing uncertainty in the market.”