The start of 2026 has brought no shortage of uncertainty, from geopolitical headlines to shifting economic policy signals. In the latest episode of Peachtree Point of View, host Greg Friedman, CEO of Peachtree Group, speaks with Mark Zandi, Chief Economist at Moody's Analytics, to assess where the economy and commercial real estate are headed and how investors should position themselves.
Zandi's baseline outlook for the economy is cautious but constructive. He expects growth to remain intact, supported by artificial intelligence investment, strong balance sheets among higher-income consumers and fiscal stimulus tied to deficit-financed tax cuts. "I think it's going to be an OK year," Zandi notes, adding that AI-related investment and wealth effects from equity markets continue to provide meaningful support. At the same time, he points out that several sectors remain under pressure, including manufacturing, transportation, agriculture and real estate.
Interest rates remain a central concern for investors. While Zandi expects the Federal Reserve to cut short-term rates as labor market conditions soften, he cautions against assuming that long-term rates will follow suit. "If I were kind of penciling in a 10-year yield when I'm thinking about an investment, I would probably pencil in four to four and a quarter," he explains. That range, he argues, aligns with long-run economic fundamentals and should be a core assumption for prudent underwriting.
For commercial real estate investors, Zandi acknowledges the pain of the past several years. "The one asset class that has corrected is real estate," he says, noting that CRE values have adjusted meaningfully since peaking in 2022. However, that correction may be laying the groundwork for an opportunity. Compared to equities, corporate credit and other asset classes, real estate valuations now appear more reasonable. "From a valuation perspective, it feels like it's kind of attractive compared to these other asset balances," Zandi adds, particularly for investors with longer time horizons.
The conversation also touches on affordability challenges and the persistence of a K-shaped economy, where different segments recover at vastly different rates. Zandi emphasizes that while higher-income households remain financially strong, lower-middle-income households continue to struggle with housing, energy, and childcare costs. These structural issues, he warns, contribute to political and economic fragility that investors cannot ignore.
Key Takeaways for Investors:
For a deeper dive into these insights and what they mean for commercial real estate, listen to the full episode of Peachtree Point of View with Greg Friedman and Mark Zandi.
