CRE's Bargain Window Is Closing — Landlords Must Now Earn Value Through Operations
Bisnow · 2 September 2026
TL;DR
The era of buying commercial real estate at steep discounts is largely over, according to midyear analyses from JLL, UBS, Principal Asset Management, and Newmark. With valuations holding firm and interest rate cuts looking increasingly unlikely — US Federal Reserve rate hikes are now being priced in — analysts say the next cycle rewards operators over opportunists. Net operating income (NOI) is now the primary driver of asset appreciation, with income historically accounting for roughly 85% of total returns over a cycle. US transaction volumes rose 31% year-on-year in the first half of the year to $293 billion, the strongest first half since 2022. Cap rate compression is considered unlikely, and deeply discounted distress sales have become rarer as lenders extend loans creatively and capital remains widely available.
Our take
While this article focuses on the US commercial property market, the underlying principle — that income generation, not valuation recovery, is what creates asset value in a high-rate environment — translates directly to South Africa's commercial and buy-to-let landscape. South African commercial landlords and buy-to-let investors should take note: with the South African Reserve Bank holding rates at elevated levels and cap rate compression equally unlikely here, the same logic applies. Squeezing more NOI out of existing assets — through better tenant retention, reducing vacancies, renegotiating leases, and cutting operational costs — is where value will be unlocked, not from waiting for rate relief that may not arrive. For SA investors sitting on the sidelines hoping for distressed deals, the message is sobering: widely available capital (even in SA, institutional lenders are still active) is keeping pricing firm. Deeply discounted opportunities are becoming rarer. Landlords managing commercial or residential portfolios in Johannesburg, Cape Town, or Durban should focus on occupancy quality, lease escalations, and operational efficiency. Agents advising investor clients should reframe conversations around income yield and NOI growth rather than speculative capital appreciation. The operators win this cycle — not the bargain hunters.