CRE Investment Surges Despite Higher Inflation and Rates

Commercial real estate investment has seen a surprising surge despite higher inflation and interest rates. Last week, the Federal Reserve raised interest rates by a quarter point while signaling another hike later this year.

The industry had previously been plagued by high interest rates, which delayed big investments and transaction activity until the Fed lowered its benchmark rate from 5.25 to 5.5 percent in 2023. However, even with lower rates of 3.5 to 3.75 percent in December 2025, investors were still wary due to stubbornly high inflation.

But recent data suggests that the mood has shifted, and commercial real estate's investment community is adapting to new economic realities with surprising ease. Avison Young reported a 14.7 percent increase in investment sales volume for the first half of 2026, totaling $233.6 billion. JLL also noted that 'global direct investment carried strong momentum into the second quarter,' with activity in the Americas increasing by 26 percent.

Jay Neveloff, partner and chair of U.S. real estate for HSF Kramer, believes that investors are no longer driven by interest rates but rather by their desire to put money to work. With $1.3 trillion in available capital, investors are looking past short-term rate hikes and focusing on long-term horizons.