Article
Real estate in transition: New York and national market updates
June 30, 2026 · Authored by Mike Kamienski, Matthew Brody and Rich Mirliss
Baker Tilly’s REconnect New York event on June 3, 2026, brought together leading voices across the real estate industry to examine where the market stands today and where it is heading next. Across discussions focused on New York, national capital markets, and broader leadership perspectives, a consistent theme emerged: the industry is not facing a downturn, it is facing a structural reset.
Despite subdued transaction volumes and ongoing capital market dislocation, underlying demand drivers, particularly in New York, remain resilient. At the same time, investors are adjusting to a new reality defined by higher interest rates, shifting capital flows, and the growing influence of technology. Below is a summary of the most important takeaways from the event.
Then, now, next: New York and the East Region’s role in the future of commercial real estate
Top three key takeaways:
- New York’s talent and income growth continue to drive demand
New York’s ability to attract highly skilled, high-earning talent remains its greatest advantage. As these professionals increasingly concentrate in the city, they are supporting both office demand and sustained rent growth, particularly as incomes continue to rise alongside housing costs. - Housing supply constraints are structural and ongoing
The city continues to face a chronic housing shortage, driven by regulatory hurdles and insufficient development incentives. Limited new supply is keeping occupancy elevated and reinforcing long-term pricing strength, even as affordability pressures increase. - Office recovery is real but highly selective
Demand is returning, particularly for high-quality, well-located office assets, with technology and AI-driven companies leading leasing activity. However, lower-tier assets remain challenged, and office-to-residential conversions, while promising, are complex and not universally viable.
Forces shaping commercial real estate in the U.S.
Top three key takeaways:
- Capital markets dislocation is limiting transactions
Elevated interest rates and pricing gaps between buyers and sellers are suppressing deal flow. Many owners are choosing to refinance instead of sell, prolonging the repricing cycle, and delaying broader market recovery. - Shift from equity to debt is reshaping investment behavior
Investors continue to favor debt strategies, which offer attractive returns with lower risk compared to equity. This shift has reduced liquidity on the equity side and is a key reason transaction activity remains subdued. - Opportunities are highly sector and market-specific
Performance dispersion across property types and geographies is at historic levels. While sectors like grocery-anchored retail and certain industrial assets remain resilient, others such as lower-quality office and some multifamily markets are experiencing growing stress and potential distress opportunities. Panelists also pointed to several asset classes and geographies they are closely monitoring. Multifamily, industrial, retail, and high-quality office stood out as priority areas, underscoring their near-term stability and long-term investment appeal.
Market outlook and leadership perspectives
Top three key takeaways:
- Equity capital will be the catalyst for market recovery
Debt capital is active, but a full recovery in transaction activity will depend on the return of equity investors. Early signs suggest global capital is beginning to re-engage, but timing remains uncertain. - New York remains a global center of real estate demand
Despite challenges, New York continues to attract talent, capital, and businesses at a level unmatched by other markets. Its unique combination of infrastructure, culture, and economic diversity underpins its long-term resilience. - Operational excellence and technology will define the next cycle
With financial engineering less effective in a higher-rate environment, value creation now depends on strong operations and asset management. At the same time, advancements in AI and technology are beginning to reshape demand patterns and investment strategies across the industry.
While capital markets remain dislocated and transaction activity is muted, underlying demand drivers, particularly in New York, remain strong. Talent concentration, income growth, and global investor interest continue to support long-term fundamentals.
At the same time, the industry is undergoing a structural shift. The reliance on financial engineering has given way to a renewed focus on operations, asset selection, and active management. Investors who can adapt to this environment, leveraging data, technology, and disciplined underwriting will be best positioned to capitalize on emerging opportunities.
Ultimately, despite short-term challenges, the outlook remains constructive. As equity capital returns and markets stabilize, the next cycle will likely reward those who embrace both the complexity and the opportunity inherent in today’s evolving landscape.
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