Why Rate Cuts Won't Save Every California CRE Deal

Many investors are holding out for rate cuts to unlock commercial real estate deals — but that strategy may be a mistake. Here's what's really driving the market in the second half of 2026.

A lot of investors and borrowers I speak with are pinning their hopes on rate cuts to fix their commercial real estate deals. I want to be direct with you: that thinking can lead you in the wrong direction.

Here's the reality. For certain property types — particularly office — no reasonable rate reduction is going to solve the fundamental problems. Weak tenant demand, remote work trends, and structural oversupply are issues that cheaper money simply cannot fix. A deal that doesn't pencil at current rates often won't pencil at lower rates either, if the underlying asset is struggling.

For multifamily and other resilient property types, the picture is more nuanced. Capital is beginning to flow again in 2026, which is genuinely encouraging. But the bigger question for the second half of this year is whether tenants and consumers can sustain their financial footing. That's the real variable — not just where the Fed moves next.

What does this mean for you? It means underwriting deals based on their actual fundamentals, not on a hoped-for rate environment. It means being selective, working with lenders who are doing the same, and not letting the promise of rate relief push you into a weak transaction.

Thinking about a commercial purchase or refinance in California? Let's talk through the numbers honestly. Reach out to our team for a real conversation about what works today.