Latest / The Hannah Hammond Show / The Opportunity That Will Make Millionaires in 2026

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The Opportunity That Will Make Millionaires in 2026 · The Hannah Hammond Show

• 0:00
  $936 billion. That's how much commercial real
• 0:04
  estate debt is maturing in 2026, not over the next five years.
• 0:08
  This year, that's almost 19% more than in 2025.
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  And it's the largest single year refinancing wave in the history
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  of American real estate. And at the same time, office
• 0:20
  vacancy just hit 18.2% nationally, the highest level
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  that we've seen in decades. CMBS distress rates climbed to
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  almost 11%, and an estimated 250 million square feet of office
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  space is projected to be demolished or permanently
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  removed from the market completely.
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  But here's what nobody's telling you Well, one part of the market
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  is in genuine crisis. Another part is experiencing the
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  strongest fundamentals in a decade.
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  Retail vacancy is under 4 1/2%, the tightest in over 20 years.
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  Industrial demand just posted its strongest six months since
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  2023. CBRE forecast investment
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  activity to hit $562 billion this year, nearly matching pre
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  pandemic levels. And CMBS issuance is on track to
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  hit a post 2008 record. So this isn't a market that's
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  crashing or booming. It's a market that's literally
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  splitting in two. And here's what I need you to
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  understand before we go any further.
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  In my career, I have never seen a better setup for investors who
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  know what they're doing. Not since 2008.
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  Because in volatility and fear and in distress lies the
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  greatest opportunities. And this isn't cliche.
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  This is exactly how the biggest fortunes in real estate have
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  been built. And the window is open right
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  now. I'm Hannah Hammond, I'm the CEO
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  of HP Capital, a national real estate capital advisory firm,
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  and we originate debt and equity for commercial real estate every
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  single day. And I'm going to walk you
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  through the entire market, every major asset class, the capital
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  markets environment, and where the real opportunities are right
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  now. So before we get into the
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  individual asset classes, you have to understand what's
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  happening in the capital markets because capital is the
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  bloodstream of commercial real estate.
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  Every single acquisition, every refinance, every development, it
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  all flows through the capital markets.
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  And right now the picture is pretty complicated.
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  So let's start with interest rates. the Fed has been holding
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  steady after cutting 75 basis points across late 24 and into
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  25. Markets are pricing in maybe one
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  more 25 basis point cut in the back half of 2026.
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  But here's the critical nuance that most people miss. the Fed
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  controls short term rates. Most commercial real estate is
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  priced off of the 10 year treasury and the 10 year has
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  been stubbornly range bound between 4:00 and 4:00 and a
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  quarter percent since mid 2025. South, even though the Fed has
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  been cutting long term borrowing costs really haven't moved that
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  much and that matters enormously for the maturity wall because we
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  talked about that $936 billion number.
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  Loans that were originated at 3 to 4% are now refinancing at six
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  or 7%. S&P Global reports that the
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  average interest rate on new CRE loans is 6.24%, almost 150 basis
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  points higher than the debt that's coming off the books.
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  So for a $50 million loan, that spread adds roughly $750,000 a
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  year in debt service. And the good news is that
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  lenders are back. You have to pulling away in 2022
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  and 2023. Capital is flowing again.
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  CBRE forecast that private label CMBS issuance will hit $183
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  billion in 2026, a post financial crisis record and an
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  18% jump from 2025. And Freddie Mac each got a 20%
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  increase in their 2026 lending caps to $88 billion each.
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  CBS spreads are historically tight around 75 to 82 basis
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  points, and private credit continues to expand its
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  footprint as banks scale back. So the bottom line on capital
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  markets is debt is available, liquidity is improving, and
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  transaction volume is accelerating, But the cost of
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  capital is structurally higher than it was two years ago.
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  And that's creating winners and losers across every single asset
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  class. And here's the part that I want
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  you to hear. This dislocation, the gap
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  between where assets are priced today and where they're going to
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  be priced in, say three to five years.
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  This is the opportunity. In 2008 and 2009, everyone was
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  terrified. Credit froze, prices collapsed.
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  And the investors who had the courage, the capital and the
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  knowledge to buy during that fear created generational wealth
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  over the next decade. We are looking at a very similar
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  setup right now. Not because the entire market is
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  collapsing, because it's not, but because distress is forcing
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  good assets into the hands of new owners at reset pricing.
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  Owners who over leveraged in 2021 and 2022 are now handing
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  back the keys on assets that have nothing wrong with them at
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  all except the capital structure.
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  The building didn't break. The loan broke and that creates
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  the best buying opportunity that we have seen since the great
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  financial crisis. So let me show you exactly where
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  these opportunities are showing up, asset class by asset class.
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  OK, so multi family, this is the most single most important asset
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  class in commercial real estate. It represents the largest share
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  of investment volume, the most lending activity and the most
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  investor interest. So let's talk about what's
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  actually happening. The big story is the supply
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  wave. In 2024, developers delivered
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  over 600,000 apartment units, the most in 38 years. 2025 saw
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  roughly 500,000 more. That is an enormous amount of
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  new inventory hitting the market, and it's pushed the
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  national vacancy rate up to around 7 to 8%, depending on
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  which data we're looking at. Apartment list has it at 7.3.
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  Costar has it at nearly 8 1/2 in some markets and rent growth has
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  been essentially flat. National rents are hovering near
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  0 year over year and in some sunbelt markets like where I
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  live in Phoenix or in Austin, Dallas, Nashville, Orlando,
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  they're actually seeing rents decline as they digest this
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  massive amounts of new supply. Austin is down over 6%.
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  But here's the setup. The supply wave is ending.
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  Multi family construction starts have dropped over 50% from their
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  2023 peak. The pipeline is contracting
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  rapidly. Completions are expected to fall
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  meaningfully through 2026 and 2027.
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  And Marcus and Milchat projects that national apartment vacancy
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  has peaked and will gradually decline throughout the year.
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  And the demand side is still strong.
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  The monthly payment on a median priced home is roughly $1200
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  more than the average apartment rent.
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  Lease renewal rates are near 50%, well above historical
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  averages. The homeownership barriers are
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  keeping millions of people in the rental markets who would
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  otherwise be buying. The ULI Emerging Trends report
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  said rental housings investment outlook is head and shoulders
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  above its peers. So where it gets interesting in
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  the market is the Midwest and the Northeast are outperforming
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  Chicago, Philadelphia, New York, San Francisco.
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  Markets that were never overbuilt are posting the
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  strongest rent growth. Meanwhile, the Sunbelt markets
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  like my hometown of Phoenix, Dallas and Austin are still 200
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  basis points above the national average on vacancy and will not
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  fully recover until late 2027. So the plan multifamily right
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  now is don't chase Sunbelt value add with aggressive rent growth
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  assumptions. Look for supply constrained
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  markets with stable employment basis class B&C workforce
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  housing is outperforming luxury and with the GSE lending caps up
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  20%, the debt is there. Distress related apartment sales
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  have climbed from $1.1 billion in early 2020 to $13.8 billion
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  by mid 2025 and that number is still rising as the maturity
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  wall forces over leveraged sponsors to sell and those 4
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  sellers are creating the entry points that patient and well
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  capitalized investors haven't seen since 2010 and 2011.
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  OK, so moving on to industrial. This was the darling of the
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  pandemic era. E-commerce exploded, supply
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  chains went to OverDrive, and industrial vacancy dropped below
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  4% nationally. Then came the correction.
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  Developers built aggressively over 2.7 billion square feet
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  delivered since 2020, and the market is now still digesting
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  that. Supply vacancy has risen to
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  about 7 1/2% nationally, and Coastal reports over 1 1/2
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  billion square feet of available industrial space, which is a
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  record high. Rent growth has decelerated to
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  about 1 1/2% year over year, and when you factor in concessions
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  and inflation, it's really essentially flat.
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  But the inflection is happening right now.
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  Cushman and Wakefield reports that industrial vacancy held
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  flat at 7.1% for two consecutive quarters at the end of 2025, and
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  this is the first time vacancy stopped rising in this cycle.
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  Net absorption hit 54 and a half million square feet in quarter 4
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  alone, up 29% from the year before.
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  Prologis is forecasting 200,000,000 square feet of net
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  absorption in 2026, while deliveries moderate to about 180
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  million. This means demand is about to
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  exceed supply for the first time in two years.
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  So the key theme is bifurcation. Smaller industrial assets under
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  300,000 square feet have vacancy at just 4.8%, but big box
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  logistics over 300,000 square feet have peaked at about 10.6%
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  before now starting to come down.
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  Modern automation ready facilities with high power
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  capacity are outperforming everything else. 40% of space
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  under construction is now built to suit rather than spec.
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  Deliveries are down 35% from 2024 and construction is down
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  63% from 2022 peak. The pipeline is being starved of
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  new supply by higher construction costs, building
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  materials being up over 40% since 2020 as well as tighter
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  financing that sets up a tightening cycle through 2027
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  and 2028. Our industrial isn't the rocket
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  ship it was in 2021, but it is stabilizing now.
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  The supply correction is working and the structural drivers like
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  e-commerce, 16% of retail sales and growing, re sharing, third
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  party logistics expansion. These are all intact and I'm
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  telling clients this is a smart entry point for patient capital.
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  OK office, the asset class everyone loves to hate on.
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  And look, the headline numbers still are pretty ugly.
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  National vacancy is around 18 percent.
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  CMBS office distress is at 17.4%.
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  Prices in some markets are down over 50% from their peak.
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  McKenzie projects office demand will stay below pre pandemic
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  levels through 20-30. But underneath those headlines,
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  something really interesting is happening.
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  Colliers reports that net absorption has been positive for
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  six consecutive quarters. Vacancy has actually peaked and
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  has started declining. The office construction pipeline
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  hit a 25 year low and 70% of corporate real estate leaders
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  say their 2026 strategies actually includes adding office
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  space, which is up 56% from 2024.
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  So the market is split into two completely different asset
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  classes when it comes to office. We have trophy and Class A
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  office that's on fire. And in Manhattan, leasing has
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  hit almost 40 million square feet in 2025, which is the
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  highest we've seen since 2019. Net absorption in Midtown hit
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  nearly 8,000,000 square feet, which is the best we've seen in
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  30 years. Trophy occupancy in top markets
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  exceeds 95%. Rents at the best buildings are
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  hitting all time highs. AI companies are driving major
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  leasing in markets like Boston, San Francisco and New York.
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  But when we talk class B&C office, this is a completely
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  different story. They can see on older buildings
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  is over 17% and still climbing. These buildings can't compete on
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  a amenities, technology or energy efficiency.
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  Industry analysts estimate that over 250 million square feet of
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  office will be demolished or permanently removed from
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  inventory. Some people are calling these
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  buildings zombies. Lenders would rather just let
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  them go dark then try to manage and lease them up.
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  So the play in office is if you can acquire a well located
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  modern building at today's reset pricing, which in some markets
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  is $0.50 on the dollar and you have the capital to operate it
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  and lease it up, then the return can be extraordinary because
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  your cost basis is so low. This is literally the kind of
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  opportunity that comes once in a generation.
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  And I was actually just at the NBA conference in San Diego and
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  some of the panelists for the 2026 outlook, every single one
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  of the panelists said that the number one asset class that
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  they're betting on to become rich in 2026 is office in San
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  Francisco. So people bought trophy office
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  buildings in Manhattan in 2009 and 2010 at prices that looked
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  insane at the time, just like we're seeing today.
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  They ended up being the best real estate investments of the
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  decade. And I'm not saying every deal
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  works. The wrong office building right
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  now isn't just about investment. It's potentially worth nothing.
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  But that's exactly the point. The spread between the best and
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  the worst outcomes is wider than any other asset class in
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  commercial real estate. And that spread is where the
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  outsized returns live for investors who can underwrite the
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  difference. So moving on to retail, here's
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  the asset class that nobody expected to be a winner in 2026.
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  For the last decade, all anyone talked about was the retail
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  apocalypse. Amazon was going to kill every
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  store. Malls were dead.
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  And some of that did happen. Regional malls did take a
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  beating. But what's happened since is a
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  truly remarkable turn around for the right kind of retail.
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  National retail vacancy is under 4 1/2 percent.
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  Costar has it at 4.3, heading toward 4.4, and those are some
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  of the tightest vacancy numbers in over 20 years.
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  New retail construction is expected to fall 37% in 2026.
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  And JP Morgan says they've seen the strongest valuations in over
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  a decade across active shopping centers, excluding regional
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  malls. So what's driving it?
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  Well, grocery anchored retail is a machine.
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  In Dallas Fort Worth alone, 80% of new retail space built in
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  2025 was occupied by grocers. 52 new grocery stores are projected
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  across DFW over three years. Necessity based experiential and
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  service retail. These are your restaurants, your
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  fitness centers, your medical, beauty, pet services.
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  All of these are expanding, and these tenants all need physical
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  locations. You can't get a haircut on
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  Amazon, at least not yet. So retailers are getting smarter
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  about their footprints. The average retail lease signed
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  over the past year fell below 3500 square feet for the first
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  time since Costar started tracking.
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  So smaller, more efficient spaces and retailers are now
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  leasing ground floor space in multifamily buildings, student
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  housing, even office buildings. Nearly 26,000,000 square feet of
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  non traditional retail was leased through the 1st 3/4 of
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  2025. And retail is a contrarian play
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  with real fundamentals behind it.
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  Limited new supply, high barrier to entry, strong tenant demand
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  and defensive cash flow. Grocery anchored and
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  neighborhood centers in high demographic areas are among the
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  most attractive. Risk adjusted returns and CRE
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  right now. All right, I can't do a 2026
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  state of the Market without talking about data centers.
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  This sector is in a league of its own.
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  Demand from AI workloads is off the charts.
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  CBRE says 2026 leasing activity is expected to hit an all time
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  high in nine major global markets. 100% of the new
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  construction pipeline is already fully pre leased.
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  Deloitte called data centers a clear bright spot in the US
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  commercial real estate landscape.
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  The constraint isn't demand, though, it's power delivery.
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  Timelines for grid capacity are stretching out for years, which
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  is creating a premium for power advantage sites.
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  And Prologis is allocating 40% of his 2026 development starts
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  to data centers, which is up from nearly zero just a few
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  years ago. That tells you everything about
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  where the biggest logistics in the world sees growth.
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  But I do want to give a word of caution here.
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  Not everyone is bullish. In fact, at that NBA conference
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  that I was at all those panelists said that they're most
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  bullish on San Francisco office were concerned about data
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  centers in the overbuilding and all of the massive amount of
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  money that's flowing into data centers.
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  So some investors are warning about potential overbuilding and
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  the risk of the NAI spending pullback Oak tree.
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  Howard Marks has flagged the possibility of an eventual data
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  center glut and duty pushback on data centers and development is
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  real. Some projects have already been
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  abandoned due to zoning and local politics.
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  So this is a really high growth sector with real legitimate
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  risks. Size your exposure accordingly.
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  Now a few other specialty sectors that are definitely
• 17:53
  worth watching. Senior housing.
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  I love senior housing and it is definitely benefiting from
• 17:59
  demographic tailwinds and very little new supply. 10,000 people
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  turn 65 every single day and we do not have enough supply to
• 18:09
  house all of the senior citizens in the United States.
• 18:12
  Medical office remains stable as well with construction
• 18:15
  completions expected to drop sharply in 2026.
• 18:18
  Self storage is holding steady and single family rental
• 18:21
  continues to perform as home ownership affordability still
• 18:25
  stays out of reach, unfortunately for many millions
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  of Americans. So let me bring this all
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  together because I don't want you to walk away from this video
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  thinking that the sky is falling.
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  I want you to walk away understanding that what's
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  happening right now is the best setup for commercial real estate
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  investors since the 2008 financial crisis.
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  And I don't say that lightly. And let me explain why.
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  In 2008, fear was everywhere. Credit markets froze.
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  Property values collapsed. Nobody wanted to touch real
• 18:54
  estate. And the people who stepped in
• 18:56
  during that fear, who had the courage, the capital, and the
• 19:00
  knowledge to buy when everyone else was running, they built
• 19:04
  empires over the next 10 years. Every major real estate fortune
• 19:08
  that was created in the last cycle traces back to someone who
• 19:12
  bought between 2009 and 2012 when the world thought real
• 19:17
  estate was dead. We are in a remarkably similar
• 19:20
  moment. Nearly a trillion dollars of
• 19:22
  debt is forcing assets to trade. Owners who bought at the peak
• 19:26
  and over leveraged are handing back properties that have super
• 19:30
  strong fundamentals but broken capital structures.
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  Prices in entire sectors have reset 3040, or 50% from the
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  peak. And most investors are sitting
• 19:41
  on the sidelines, paralyzed by fear and headlines, waiting for
• 19:45
  conditions to be perfect before they make a move.
• 19:48
  But here's what I've learned in this business.
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  Conditions are never perfect. The perfect time to invest is
• 19:53
  always obvious in hindsight and is always terrifying in real
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  time. The people who built the most
• 20:00
  wealth in the last cycle didn't buy when it felt safe.
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  They bought when it felt scary. And right now, it feels scary to
• 20:08
  a lot of people. And that's exactly why the
• 20:11
  opportunity is here. So here's what I'm telling my
• 20:13
  clients at HP Capital right now. First, this market rewards
• 20:17
  precision and punishes laziness. The days of buying anything,
• 20:21
  financing it cheap and watching it appreciate are over.
• 20:25
  You have to know the asset class.
• 20:27
  You have to know the submarket. You have to know the capital
• 20:30
  stack. Broad bets do not work in 2026.
• 20:34
  Targeted, well underwritten bets do 2nd.
• 20:37
  The maturity wall is your best friend if you're a buyer.
• 20:41
  When nearly a trillion dollars in loans needs to be refinanced
• 20:45
  at higher rates, some owners are going to have to sell not
• 20:50
  because the asset is bad, but because the capital structure is
• 20:53
  broke. That is the definition of
• 20:54
  distressed opportunity. Good real estate, wrong balance
• 20:58
  sheet, and you can acquire it at a basis that would have been
• 21:00
  completely unthinkable years ago.
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  Third, capital structure is everything.
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  How you finance a deal in 2026 matters as much as the deal
• 21:10
  itself. The right debt, the right terms,
• 21:12
  the right Capital Partners. That's the difference between a
• 21:15
  deal that creates generational wealth and a deal that destroys
• 21:19
  you. And that's exactly what we do at
• 21:21
  HP Capital. We help borrowers find the best
• 21:23
  capital solution for their asset.
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  We help investors access the best opportunities with the
• 21:27
  right financing in place. And if you're looking at this
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  market and you see what I see that the fear is creating a once
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  in a cycle buying window, we'd love to be your capital partner.
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  The links in the description. So 4th CBRE forecast cap rates
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  to compress 5 to 15 basis points across most property types this
• 21:45
  year. This means the best buying
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  window might be right now before pricing fully adjust.
• 21:51
  The highest returns of this cycle will likely be realized
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  over the next several quarters. Not next year, now and 5th.
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  Remember, this wealth doesn't disappear during downturns.
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  It transfers from the over leveraged to the well
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  capitalized. From the uninformed to the
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  informed, from those who freeze in fear to those who move with
• 22:12
  conviction. And that's what 2026 is teaching
• 22:15
  us again. Every single person who built a
• 22:17
  real estate empire will tell you the same thing.
• 22:20
  The foundation was poured during a time when everyone else
• 22:23
  thought the world was ending. This is that time.
• 22:26
  Please subscribe to this channel.
• 22:27
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• 22:30
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• 22:31
  Thanks so much for watching.