The commercial real estate market enters 2026 with tentative stabilization and signs of modest recovery. Growing optimism in the leasing and capital markets is being driven in part by stronger-than-expected U.S. economic performance in certain sectors during 2025. Strength in multifamily, industrial, and select office categories is anticipated; however, broader market pressures persist, including refinancing challenges and the frequency and severity of climate-driven weather events, which may increase vacancy risk or impact property valuations.
Meanwhile, the commercial property insurance market is stabilizing as underwriting performance and capacity improve, though accurate property valuations and climate risk and resilience data remain essential underwriting considerations. In contrast, liability and casualty lines remain disciplined, underscoring the need for clear and well-documented risk-mitigation practices.
Refinancing Stress and Insurance Requirements
Many commercial real estate owners will face refinancing pressure in 2026. According to industry sources, more than $1.5 trillion in commercial real estate loans are scheduled to mature by the end of 2026. Although interest rates have recently eased, they remain volatile and well above the ultra-lows of the pandemic era. As such, many real estate portfolios could face high debt-service costs and tighter lending standards. In fact, some borrowers with near-term maturities could face debt payment increases of up to 100%, depending on loan structure and reset terms, according to the Counselors of Real Estate.
Lenders may scrutinize insurance-to-value accuracy, the adequacy of catastrophe coverage, and loss-control measures to reduce risk. Real estate owners can support refinancing efforts and satisfy lender requirements by securing insurance programs that include all-risk, catastrophe, and business income coverage, while also maintaining strong valuation practices and documented risk controls.
Climate Resilience and Risk Assessment Standards
The frequency and severity of extreme weather events, particularly wildfires, hurricanes, and convective storms, continue to reshape underwriting and pricing across real estate portfolios. According to scientific research group Climate Central, 2025 was the third highest year on record in the United States for billion-dollar weather and climate disasters, with 23 events totaling $115 billion in damages. To compete for favorable insurance terms, real estate owners may be required to demonstrate robust resiliency measures, including property-level protections (e.g., flood barriers, storm shutters, upgraded drainage systems, and fire-resistant materials).
Additionally, industry standards and evolving regulatory expectations are affecting how climate resiliency is assessed. Specifically, the industry is increasingly encouraging the use of standardized climate-resilience assessment frameworks (e.g., ASTM Property Resilience Assessments) to help property owners evaluate their natural hazard risks and demonstrate preparedness to lenders, insurers, and investors. Portfolio managers should adopt industry best practices and integrate climate risk into governance and compliance practices to support long-term portfolio resilience.
Habitational and Multifamily Insurance Dynamics
The habitational and multifamily sector remains a strong performer heading into 2026, driven by population growth and long-term demographic shifts, though performance and risk vary by region. Multifamily properties operating in regions prone to severe weather events could witness underwriting scrutiny, reduced capacity, or selective pricing; even with broader market stabilization, a single large catastrophe event can quickly influence insurer appetite in high-risk areas. Additionally, regions with high crime rates or plaintiff-friendly legal systems could face increased general liability exposure, leading to more restrictive policy terms, heightened loss-control requirements, or higher liability premiums.
Organizations should ensure they implement and document robust risk-control practices, such as security enhancements, environmental resilience measures, and proactive maintenance, to support resident safety, reduce operational risk, and secure the best insurance terms.
Property Market Easing vs. Liability Market Discipline
The commercial property insurance market is moderating, marking a notable shift after years of minimal underwriting profitability and hardened conditions. According to industry data, by mid-2025, many property renewals saw flat to single-digit changes, with some experiencing slight rate decreases. These favorable pricing dynamics have been fueled by improved underwriting results, increased competition for desirable accounts, and healthy market capacity. However, portfolios with poor loss histories or those located in catastrophe-exposed regions may still encounter tightened terms, higher deductibles, and capacity challenges.
Nevertheless, casualty and excess markets remain cautious and selective, so even with commercial property relief, portfolio owners may still face pressure across their overall insurance programs. Real estate owners should review their vendor contracts (e.g., security firms, maintenance contractors, and renovation companies) and tenant leases for indemnification clauses to limit liability. They should also ensure that these third parties carry appropriate insurance and can provide certificates of insurance as proof, thereby supporting effective risk transfer.
Data, ESG, and Governance in Risk Management
Risk management in commercial real estate is becoming fundamentally more data driven, reflecting new pressures from insurers, lenders, investors, and regulators. While property type and location remain important, they no longer provide a complete picture of a property’s risk profile. Specifically, climate resilience, energy performance metrics, and other ESG expectations increasingly influence investment, risk management, and insurance strategies. Furthermore, data-driven strategies such as predictive analytics platforms, climate-risk modeling tools, and Internet of Things-enabled building systems are becoming standard components in due diligence workflows. Board-level oversight of climate and operational risks, documented risk-management frameworks, and transparent reporting on emissions, climate impacts, and resilience measures may enhance insurer confidence and support more favorable terms.
Conclusion
By monitoring the trends impacting the commercial real estate market and taking steps to mitigate their associated exposures, real estate businesses can effectively position themselves to maintain long-term growth and operational success.
This Risk Insights is not intended to be exhaustive nor should any discussion or opinions be contrued as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. © 2026 Zywave, Inc. All rights reserved.