For most of the past decade, commercial real estate investors operated with a safety net they didn’t always recognize as one. When borrowing costs sit near zero, the math on a marginal deal can still pencil out — weak cash flow gets papered over by cheap debt, and rising property values reward patience even when the underlying investment doesn’t justify it. The discipline that separates careful analysis from wishful thinking becomes harder to see, and easier to skip.
That environment is now gone. Interest rates rose, and a significant volume of commercial real estate debt — originally taken out when borrowing was cheap, and property values were high — is now coming due. Refinancing those assets at today’s rates and lending standards has become far more difficult. Lisa Knee, Managing Partner and National Real Estate Practice Leader at EisnerAmper, works with family offices, private equity funds, and developers navigating exactly this shift — and what she’s seeing isn’t panic, but a fundamental reset in how capital is being deployed, evaluated, and protected.
When Cheap Money Hid the Problems
The cushion that cheap money provided has been replaced by something more demanding: the requirement that every property justify itself on its own terms. Traditional banks have pulled back, tightening what they’re willing to lend on and who they’re willing to lend to. Private lenders have stepped in to fill that gap, but they’re not writing blank checks. They’re looking hard at each deal individually — the track record of the person running it, the strength of the property itself, and whether the numbers actually hold up.
Cash flow — the money a property brings in after expenses — has become the central question across every type of real estate investment, whether the decision is to buy, refinance, reposition, or hold. Investors want to know exactly how their money will be used and exactly how returns will be generated, property by property. That means careful analytical work has become essential: testing whether the numbers hold up under pressure, understanding how costs are estimated in specific local markets, and confirming that the people running the deal have done it successfully before.
Asset by Asset, Market by Market
Multifamily — apartment buildings and rental housing — remains a fundamentally sound investment. There is a genuine housing shortage across the United States, and that need doesn’t disappear because financing is harder to come by. But the opportunities aren’t evenly spread. Rent growth projections need to reflect what’s actually happening in a specific neighborhood, not national averages. Operating costs — particularly insurance, which spiked sharply in recent years and caught many property owners off guard — need to be estimated carefully for each local market. States with lower taxes and mountain region markets continue to attract people relocating from elsewhere; major coastal cities require closer scrutiny. Strategies focused on workforce and affordable housing continue to draw serious investment interest, with recent federal legislation sending additional signals of support for new housing development.
Industrial real estate — warehouses, distribution facilities, and the like — remains a strong asset class, driven by ongoing demand from e-commerce and shifts in how companies manage their supply chains. Properties focused on last-mile delivery, meaning the final step of getting a package to someone’s door, continue to command strong pricing. Data centers are a different story. Investors who treat them like traditional warehouses may be taking on risks they don’t fully understand — reliable power supply, electrical grid capacity, cooling systems, construction costs, and the speed at which technology becomes outdated all factor into the evaluation of a data center in ways that go well beyond standard real estate analysis.
Office space is where expectations have shifted most dramatically, and where the most unexpected opportunity may be taking shape. The sector fell sharply out of favor after the pandemic, but early signs of recovery are showing up in specific cities. Companies focused on artificial intelligence have begun leasing meaningful amounts of space in markets like San Francisco, and the broader push from major employers to bring workers back is creating real demand. The most desirable, well-located office buildings are already filling up. The more gradual story is what happens to older, less prestigious buildings — where lower rents are likely to attract tenants over time, just as happened with retail real estate through its own difficult period.
The Questions Worth Asking
The investors navigating this cycle well share a common approach: they are asking harder questions earlier. Not just whether a property looks attractively priced, but whether the income it generates holds up when things don’t go according to plan. Whether the people managing the investment have done so successfully under conditions like these. And, critically, whether the local market actually supports the assumptions being made, because what’s true nationally is rarely true everywhere, and the real picture emerges neighborhood by neighborhood, city by city.
This is also a moment when working with experienced advisors has become more consequential. The current environment is genuinely complex — properties with loans coming due, shifting tax rules, entirely new asset categories like data centers, and uneven recovery across different property types. Understanding how tax incentives, investment structures, and current market conditions interact is not straightforward, and the cost of getting it wrong has risen alongside interest rates.
Artificial intelligence is adding another dimension to watch. Its influence is beginning to be felt across real estate — from how investors research markets and model financial returns to how property managers run their buildings day-to-day — in ways that are still early but accelerating quickly. Across it all, the message this cycle keeps returning to is the same: understand the property, know the people running it, stress-test the income, and don’t let broad national headlines substitute for real local knowledge.
About the Expert: Lisa Knee is the Managing Partner and National Leader of the Real Estate practice and the National Real Estate Private Equity Group at EisnerAmper, where she also serves as National Real Estate Tax Leader. With over 30 years of experience, her work spans acquisitions, refinancing, like-kind exchanges, joint venture agreements, and fund structures, including private REITs and Qualified Opportunity Funds.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
