Market Intelligence

Every year around this time, people want predictions. What's the market going to do? Are rates coming down? Is it a buyer's market or a seller's market? After 20+ years in commercial real estate, I've learned that the smartest thing I can do isn't predict. It's listen. And right now, the market is saying something clear: the deals are there, but they belong to the people who are prepared.

The past two years tested a lot of players in this business. Rising interest rates compressed buyer pools, pushed cap rates, and put a lot of sellers in a holding pattern waiting for the market to come back to them. What we're seeing now is a recalibration. Owners who bought at peak pricing are starting to accept that the 2021 numbers aren't coming back anytime soon. That shift in expectation is where real opportunity starts to emerge, not just for investors, but for tenants and business owners who have been sitting on the sidelines too.

In Nebraska specifically, I'm watching a few things closely. Industrial demand hasn't softened the way it has in some coastal markets. We're still seeing strong absorption and limited Class A supply in key submarkets. Retail continues to outperform the narrative. Well-located, necessity-based retail is performing well, and landlords with quality tenants are holding firm on rents. The office story is more nuanced, and I think anyone treating it as a single category is making a mistake.

My advice going into 2026: don't wait for perfect conditions. The investors I respect most aren't trying to time the bottom. They're underwriting deals conservatively, building in margin, and moving when the numbers work. If you've been thinking about a disposition, an acquisition, or renegotiating a lease that's coming up in the next 18 months, now is the time to have that conversation.

I've sat across the table from a lot of sellers over the years who didn't know what a 1031 exchange was until about 30 days before closing, and some who never figured it out in time. That's a painful conversation to have. When structured properly, a 1031 exchange can be one of the most powerful wealth-building tools available to a real property owner, and yet it remains one of the most underutilized.

The concept is straightforward: by reinvesting proceeds from the sale of investment property into a like-kind replacement property, you defer capital gains taxes that would otherwise come due at the time of sale. Depending on your basis and appreciation, that could mean deferring hundreds of thousands of dollars. That's capital that stays invested and working for you rather than going to the IRS.

What trips people up is the timing. The IRS gives you 45 days from closing to identify potential replacement properties and 180 days to close. That sounds like a wide window until you're actually in it. Forty-five days in a constrained market, navigating due diligence on replacement candidates while managing your own sale, is genuinely hard.

I've helped clients complete exchanges into net lease properties, industrial assets, multi-tenant retail centers, and office buildings. The asset class that makes sense depends on where you are in your investment timeline, your risk tolerance, and what you want your real estate to do for you.

Real estate is often the second or third largest line item on a business's balance sheet, right behind payroll. And yet, for most business owners, it gets about a tenth of the attention that staffing, operations, or marketing receives. I've seen this pattern repeat itself for two decades, and it costs companies real money.

The most common mistake I see is letting leases expire without enough runway to negotiate properly. A lease coming up in 12 months isn't a negotiation. It's a crisis. When a landlord knows you're within a year of expiration and haven't started looking, they know you're captive. Your leverage is gone before the conversation begins.

The second mistake is assuming the landlord's first offer is their best offer. It never is. Every term in a lease is negotiable: rent, escalations, operating expense caps, renewal option pricing, early termination rights. Most tenants sign what they're handed because they don't know what to push back on, or they don't want to create friction with a landlord they have a relationship with.

If you're a business owner with a lease expiring in the next two to three years, I'd encourage you to at least have a market evaluation done. No commitment, no obligation, just an honest look at what your current situation costs you compared to what's available.

Cap rates are probably the most discussed and most misunderstood metric in commercial real estate investing. I hear them thrown around in conversations all the time as if they tell the whole story. A 6.5% cap sounds better than a 5.5% cap, right? Maybe. But context matters enormously, and buying on cap rate alone is how people get into trouble.

At its core, a capitalization rate is simple: it's the property's net operating income divided by the purchase price. It tells you the unlevered yield you're buying at the moment of acquisition. A lower cap rate typically signals lower risk, stronger tenancy, or a more liquid market, but not always. A higher cap rate can reflect a genuine value-add opportunity, or it can reflect a problem a seller is pricing around.

What the cap rate doesn't tell you is equally important. It doesn't account for your financing terms, which have a massive impact on actual cash-on-cash returns. It doesn't reflect what happens at lease rollover. It doesn't account for deferred capital expenditure, tax reassessment upon sale, or the depth of the buyer pool when it's time to exit.

The deals I recommend to clients are built on a full underwriting: stressed vacancy assumptions, realistic expense loads, capital reserve budgets, exit cap analysis, and a look at who the next buyer will be at disposition. The numbers tell the beginning of the story. The underwriting tells the rest.

I've had this conversation a lot lately: someone calls me after reading a national headline about office vacancy rates or retail closures, and they want to know if the commercial real estate market is in trouble. My answer is always the same. It depends entirely on which market you're talking about, and which asset class.

Nebraska's economic fundamentals are about as solid as they come for commercial real estate. We have a diversified employment base, low unemployment, a growing population in key corridors, and we haven't experienced the kind of speculative overdevelopment that has created problems in other markets.

Investment capital is starting to notice. I've seen more out-of-state buyers looking seriously at Midwest net lease and industrial assets over the past 12 months than at any point in my career. When investors from California or the Northeast start running the numbers on Nebraska assets, they're often surprised.

For local owners and investors, I'd argue that the greatest risk right now isn't market volatility. It's complacency. The market is moving, capital is repositioning, and the window to make smart decisions in advance of broader changes isn't open indefinitely.