Greg Friedman offers a wide perspective on the real estate market. He uses the 10-year treasury yield as a market indicator but notes inconsistencies in the latest trends compared to real estate. Greg believes there will be better buying opportunities on the horizon once real estate finds a bottom to build a new foundation. Listen to the full broadcast on Schwab Network.

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In a timely and insightful conversation on the Peachtree Point of View podcast, host Greg Friedman sits down with Mark Zandi, Chief Economist at Moody's, to discuss the current economic landscape and what investors should be watching.

Recession Risks on the Rise

Zandi doesn't mince words about the current economic situation. He notes that the probability of recession has jumped from 15% to 35% in recent months, primarily due to policy decisions – especially the escalating global trade war. While he believes the economy remains"fundamentally sound," Zandi warns that continued policy uncertainty could tip the scales toward recession within weeks.

"If he continues down this path for another couple, three, four weeks, recession will be more likely than not," Zandi cautions about the administration's trade policies.

Interest Rates and Commercial Real Estate

For commercial real estate investors, Zandi offers a sobering perspective on interest rates. Despite the administration's desire for lower rates, he believes the 10-year Treasury yield (around 4.1%) is appropriately priced for a well-functioning economy. Unless we enter a recession, Zandi doesn't foresee significant rate decreases in the near term.

Commercial real estate, which Zandi acknowledges has"been in a recession the last three years," faces continued challenges. While he believes much of the valuation adjustment is complete, a broader economic recession would mean "another leg down in valuations and pricing."

Key Indicators to Watch

For investors trying to gauge recession risks, Zandi offers practical metrics to monitor:

• Weekly initial unemployment claims: Safe at 225,000, concerning above 250,000, and recessionary at 300,000
• Consumer spending patterns, which have "flatlined" since November
• Housing market metrics, particularly new construction activity

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Private Credit Markets

On private credit markets, Zandi noted that private credit has played a critical role in recent years, stepping in to provide capital when banks pulled back, which he believes helped the U.S. avoid a recession. The market has grown rapidly, now estimated at $1.7 trillion and surpassing the high-yield bond market and rivaling the size of the leveraged loan market.

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The Bottom Line

Zandi's parting advice? "Buckle up." With policy uncertainty, trade tensions, and shifting consumer sentiment, the economic road ahead promises to be bumpy.

To hear the full conversation and gain deeper insights on navigating these challenging markets, listen to the complete episode of Peachtree Point of View with Mark Zandi on your favorite podcast platform.

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A prominent investor who shaped modern portfolio strategies, Robert Arnott, once said, 'In investing, what is comfortable is rarely profitable.'

This idea rings especially true in today's market, where uncertainty, volatility and shifting economic conditions create both risks and opportunities. The most successful investors recognize that these periods often present the most compelling investment opportunities.

We, too, see these moments as catalysts for strategic capital deployment. The evolving commercial real estate landscape is creating precisely the kind of dislocation where disciplined, well-capitalized investors can thrive.

As our team assesses the commercial real estate landscape, recent developments in the credit markets continue to present compelling opportunities.

The latest banking data reveals a noteworthy shift: while demand for C&I loans rises for the first time in two years, banks continue tightening the grip around commercial real estate.

Despite increasing demand for liquidity, traditional lenders remain highly selective, offering lower loan-to-value ratios and requiring stronger borrower covenants. As a result, many commercial real estate owners and developers face significant refinancing challenges, particularly with the substantial level of debt maturities in 2025 and beyond. We are talking about trillions of dollars in loan maturing.  

This dynamic reinforces a growing reliance on private credit lending, a space where our firm not only has a long track record but is also well-positioned to capitalize on ongoing market dislocations to deliver attractive, risk-adjusted returns.

Our firm's ability to pivot across the capital stack—originating loans, acquiring debt or investing opportunistically  - positions us to capitalize on this dislocation.

With rising debt costs and limited refinancing options, many commercial real estate owners will be forced to make tough decisions. While this warning has been repeated over the past few years, we are now at the proverbial end of the line. As a result, we anticipate an increase in asset sale opportunities, acquiring first mortgages and recapitalizations.

Our experience in navigating prior downturns, coupled with our underwriting expertise, allows us to approach these opportunities with discipline, ensuring we secure assets and debt positions at favorable valuations.

Positioning for the Future

As we move through this evolving economic cycle, our focus remains on the disciplined deployment of capital into opportunities that offer strong upside potential while minimizing the downside.  

We recognize that market dislocations create compelling entry points for special situation investments. As liquidity constraints tighten across key sectors, we are strategically positioned to deploy capital into high-value opportunities. In hospitality, the deferral of brand-mandated renovations is reaching a breaking point, driving distress and accelerating transactions—further reinforcing the need for flexible, well-capitalized investors to step in.

Our experience in stressed investing and structured finance enables us to use creative solutions when traditional capital sources are unavailable. By maintaining a flexible approach and strong liquidity reserves, we are positioned to act decisively as the market turns, capturing value where others cannot.

The favorable landscape for private credit lending will remain with us for years, but as it evolves, it is also creating new opportunities that we are poised to seize. Our ability to deploy capital where others cannot continue to drive outsized value for our stakeholders.