Commercial Real Estate Investment Volume Climbs Despite Rising Rates and Inflation

Commercial Real Estate Investment Volume Climbs Despite Rising Rates and Inflation

Commercial real estate investors are showing little sign of retreating, even as the Federal Reserve last week lifted interest rates by a quarter point and signaled another increase before year’s end.

The move brought the federal funds rate back up to a range of 3.75 to 4 percent, after a period of easing from the 5.25 to 5.5 percent peak reached in 2023. Rates had fallen to a recent low of 3.5 to 3.75 percent in December 2025 — a level that, while below the peak, remained well above the benchmarks the industry had grown accustomed to before 2022. This time around, higher rates are also arriving alongside persistently elevated inflation.

Yet the anticipated alarm over the hike has largely failed to materialize. Industry observers describe a sector that has quietly adjusted to the new environment rather than lobbying for relief, even as tariffs, the war in Iran, and stubborn inflation contribute to a broader sense of geopolitical and economic instability.

Transaction data backs up that picture of resilience. According to a report from Avison Young, first-half 2026 investment sales volume reached $233.6 billion, up 14.7 percent from the same period a year earlier and the strongest first half since 2022. The first quarter alone posted $120 billion in volume — a 25.5 percent year-over-year jump and the highest first-quarter figure in four years.

Global figures tell a similar story. An August 2026 report from JLL (NYSE: JLL) found that global direct investment carried strong momentum into the second quarter, with activity in the Americas rising 26 percent and the United States performing strongly. JLL, a commercial real estate services and investment management firm with a market capitalization of roughly $15.8 billion, saw its shares trade at $336.38 recently, up 1.58 percent from the prior close of $331.14.

Some industry figures suggest the disconnect reflects a rethinking of what “stability” means for investors. Jay Neveloff, partner and chair of U.S. real estate at the law firm HSF Kramer, pointed to the Fed’s 2 percent inflation baseline as an outdated anchor, arguing that the benchmark makes little sense in a more complex economic landscape. In a world where disruptive events arrive in rapid succession, instability itself may effectively be becoming the new baseline that investors price in.

What to watch

• Whether the Fed follows through on its signaled second rate hike later this year, and how financing costs respond.
• Updated quarterly investment sales data to see if first-half momentum holds through the second half of 2026.
• JLL’s next earnings report for indications on global transaction activity and Americas volumes.
• Inflation readings relative to the Fed’s 2 percent target, which continue to shape rate policy.

Source: original release