The Great Real Estate Standoff: Buyers Have Cash, Owners Won’t Sell
I ran a simple LinkedIn poll this week asking real estate investors what they are doing right now.
The results caught my attention:
52% are buying.
47% are sitting on the sidelines.
2% are selling.
It’s only 60 votes, so this isn’t a scientific survey.
There are buyers.
There is money.
What we don't have are a lot of owners who actually want to sell.
Where Are the Sellers?
Interest rates have changed the math on almost every commercial real estate deal.
Values have come down. Debt costs more. Refinancing is harder. Buyers need higher yields to make deals work.
There is distress.
There are loan problems.
There are owners who need to sell.
But we haven't seen a wave of forced selling.
Instead, a lot of owners appear to be waiting.
Multifamily: Plenty for Sale, Not Much I Want to Buy
This is where I see the standoff most clearly.
There are apartment buildings on the market. But when I look through the inventory, a lot of it is older product with significant deferred maintenance, regulatory issues, difficult tenant situations or simply pricing that doesn't make sense at today's borrowing costs.
The better buildings are harder to find.
Meanwhile, the underlying apartment market hasn't collapsed. Los Angeles multifamily vacancy was about 5.5% in Q2 2026, with average asking rents around $2,310 per unit per month.
If the property is occupied, generating cash flow and the owner doesn't have a loan forcing a decision, why sell into a difficult financing market?
That is part of the problem for buyers.
The assets we really want aren't necessarily the assets that are being offered.
Office: The Repricing Has Already Been Severe
Office is different.
This is the sector where we have already seen major losses and distressed transactions.
Some buildings have traded at big discounts to their previous values and, in most cases, below what it would cost to build them today.
That is starting to get a lot of owner user buyers.
Some are betting on an eventual office recovery.
Others are buying for the land or looking at residential and other conversion opportunities.
But the operating fundamentals are still difficult.
Greater Los Angeles office absorption turned negative again in Q2, according to Avison Young.
Industrial: Looking for the Bottom
Industrial has also gone through a reset.
Los Angeles industrial asking rents were down 8.6% year-over-year in Q1, while direct vacancy reached 5.9%.
But there are signs that demand is improving.
Nationally, industrial leasing activity jumped 49.4% year-over-year in Q2, while net absorption nearly doubled from the prior quarter.
That's why industrial is interesting to watch right now.
The sector got hit.
Rents came down.
Values adjusted.
But demand hasn't disappeared.
We may be getting closer to a bottom.
Retail: Investors Are Still Cautious
Retail is somewhere in between.
Los Angeles retail vacancy reached 5.83% in Q2, its highest level in more than a decade. But trailing 12-month sales volume reached approximately $4.9 billion, up more than 40% year-over-year.
Another market report put average retail cap rates at about 6.2%, up from 6.0% a year earlier.
Deals are happening.
But investors are being selective.
Good locations with strong tenants are one thing.
The Real Issue Is Still Interest Rates
This entire market comes back to the cost of money.
Rates moved up quickly, but commercial real estate takes a long time to adjust.
An owner with a low-rate loan doesn't necessarily have to do anything today.
The real test comes when that loan matures.
There is a significant amount of commercial real estate debt coming due in 2026, and elevated borrowing costs continue to create refinancing risk.
That's where I think we need to pay attention.
A building may work with 3% or 4% debt.
The same building can have a completely different cash flow when that loan needs to be refinanced at 6% or 7%.
The owner then has a few choices.
Put more equity into the property.
Accept lower cash flow.
Find new financing.
Or sell.
That's where forced sellers can come from.
So What Breaks the Standoff?
I think there are two basic possibilities.
If interest rates stabilize or come down, buyers and sellers may start meeting again.
If rates stay higher for longer, we could see people being forced to sell.
More loans mature. More owners face difficult refinancing decisions.
Some will put additional equity into their properties.
Others won't.
That's when we could finally see more forced sellers.
Banks are already starting to increase commercial real estate lending again, although underwriting remains tighter.
What I'm Watching
My little LinkedIn poll isn't going to predict the real estate market.
But 2% saying they are selling is interesting.
Especially when 52% say they're buying.
There seems to be plenty of capital looking for real estate.
There is even more capital sitting on the sidelines waiting for the right opportunity.
The missing piece is good supply. I've seen some great properties being purchased during this downturn and some that I wonder why the owner bought garbage.
Right now, owners of good real estate don't seem particularly interested in selling it.
So I don't think the big question for the rest of 2026 is whether there are buyers.
The question is whether interest rates stay high long enough to finally create the sellers.
I'm researching the market to make better investment strategies. I'm sharing what I find along the way with other investors to have discussions, debates and help make better decisions.
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