Commercial Observer Article Link
Marc Norman, Associate Dean at NYU’s Schack Institute of Real Estate, co-hosted the Institute’s 58th Annual Capital Markets Conference, an event that stands as a testament to the platform he has built, one that regularly draws Wall Street’s most influential voices to wrestle with the questions that matter most to commercial real estate. This year’s gathering at The Pierre Hotel in Manhattan was no exception, convening senior figures from Goldman Sachs, Starwood Property Trust, Ares Real Estate, and Deutsche Bank to confront a tricky paradox heading into 2026.
The central tension is this: short-term interest rates may fall, but long-term borrowing costs could actually rise. The concern among panellists is that if President Trump pushes the Federal Reserve too aggressively to cut rates, inflation expectations could spike, sending the 10-year Treasury yield, and with it, cap rates and long-term mortgage costs – higher. Jeffrey DiModica, President of Starwood Property Trust, put it plainly: “He’s going to put the pedal down on SOFR, and that’s the real risk to real estate markets because the cap rates are going to be run off the 10-Year.” Goldman Sachs added further context, projecting long-term rates hovering in the 4 to 4.5% range for the next decade, underpinned by sustained government debt and spending.
The mood in the room was cautious but not pessimistic. CMBS volume is on track for a historically high $125 billion in 2025, Midtown East office rents have climbed from $60 to $200 per square foot since 2009, and lenders are actively working through legacy loan books. The broader message from Schack’s stage was measured: the market is healing, but the path forward runs directly through the Federal Reserve, and the question of who controls its direction remains the defining variable for the industry in the year ahead.
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