Commercial real estate brokers are confronting a harsher financing environment as the 10-year Treasury yield climbs to levels last seen in 2007, following the Federal Reserve’s September rate hike. For deals that once looked solid, higher borrowing costs can quickly erode returns, forcing brokers to reassess underwriting with far less margin for error.
Dan Mosher, co-founder and CEO of DealGround, an AI-powered commercial real estate intelligence platform, says the shift doesn’t mean deals stop happening—but it does make accurate property-level data essential. “The 10-year Treasury and the 30-year Treasury have all gone up to levels not seen in the last 20 years. That is going to tighten the screws a little bit on new deals getting done,” Mosher said. Even a half-point increase in interest rates can mean the difference between a property’s rent stream covering its debt and falling short, leaving brokers with little room to rely on estimates.
When rates were lower, a wider range of outcomes could still result in a workable deal. Now, an estimate that is off by a small amount can sink an offer after weeks of work. Mosher advocates underwriting from actual property numbers rather than broad averages. “What are the rents on a specific property? Not the aggregated rents, not the hearsay rents that someone’s talking about, but the actual rents that appeared in the offering memorandum so that people can really analyze those deals before they make offers,” he said. The same precision applies to existing debt: knowing how much debt is on a property and at what rate reveals whether the owner faces distress and what a buyer can realistically pay.
The challenge extends to pricing. Many sellers still hold values from last year, and Mosher notes it will take time for them to internalize that higher financing costs reduce what buyers can offer. “I think there is a little bit of time that it’s going to take for the sellers to internalize that with interest rates going up, the value of their asset may be off from their expectations,” Mosher said. For listing brokers, a property priced on hope rather than current financing costs is likely to languish. “The visibility of DealGround allows brokers to help sellers price their properties more closely to what it will trade for. Not what they hope they’re going to get, but what they actually can get in this market,” he added.
Despite the tighter conditions, Mosher emphasizes that deals are still closing. “Deals are still getting done,” he said. The practical takeaway for brokers is to tighten inputs: underwrite using actual rents and debt on the specific property, price listings for today’s financing environment, and avoid relying on market averages that may no longer reflect buyer capacity. Brokers seeking to understand how property-level rent, lease, and debt data can support that process can review DealGround’s how it works page.
