Commercial real estate capital markets are showing positive momentum. Transaction volumes rose 27 percent in 2025 and are tracking roughly 15 percent higher again through the opening months of 2026. Financing conditions are gradually normalizing, and institutional capital is reengaging after a prolonged period of constrained liquidity, wide bid-ask spreads and suppressed activity. Yet demand for bridge and transitional lending has not abated, and understanding why reveals one of the more compelling risk-adjusted opportunities available to institutional investors today.
The explanation sits in what happened during the peak years of the prior cycle. In 2021 and 2022, approximately $719 billion in U.S. commercial real estate transactions closed at capitalization rates below 4 percent, nearly double the total volume of sub-4 percent transactions across the entire preceding decade. That surge was an anomaly, driven by near-zero interest rates, aggressive fiscal stimulus and record
