A Different Kind of Cycle
For the better part of the last 18 months, I have written about a market that feels incomplete.
Not broken.
Not recovering.
Just… unresolved.
We have spoken about:
- valuations that haven’t fully adjusted,
- owners not yet forced to transact,
- and capital that remains present, but hesitant.
But increasingly, I think we may be asking the wrong primary question.
The focus has been on property.
The answer sits in credit.
The Part of the Market We Can’t See Clearly
There is a segment of this cycle that remains largely opaque, but critically important.
Private credit.
Over the last five years, non-bank lending has shifted from a supporting role to a central pillar of the commercial property ecosystem. It has:
- filled the gap left by traditional banks,
- enabled transactions that may not have otherwise occurred,
- and provided flexibility at a time when borrowers needed it most.
But with that growth comes a question that I keep coming back to:
What happens when credit conditions tighten in a market that hasn’t fully repriced yet?
From my vantage point, there are signs that:
- loans written in 2020–2022 are approaching inflection points,
- borrower expectations and current valuations remain misaligned,
- and some lenders are now in the position of managing assets, not just financing them.
This is not a prediction of a crisis.
But it is a recognition of pressure.
And markets rarely reprice politely.
The Illusion of Stability
One of the more fascinating features of the current environment is how stable things appear on the surface.
Transaction volumes remain relatively low.
Distress is discussed more than it is seen.
Certain asset classes, particularly sub-$15m leased investments continue to trade strongly.
But stability without resolution is not strength.
It is often delayed.
In many cases, asset values today are not being set by active market clearing,
they are being held in place by the absence of forced sellers.
That distinction matters.
Because when the marginal seller changes, the market changes with it.
Private Credit: From Enabler to Price Setter
If we accept that credit has been a stabilising force, we must also accept the inverse:
It can become the catalyst for change.
Private credit lenders now sit in a position where they may influence:
- whether assets are refinanced,
- whether equity is required,
- whether extensions are granted,
- or whether assets are ultimately brought to market.
In previous cycles, this role was largely played by the banking system
with greater transparency, regulation, and uniformity of behaviour.
Today, the landscape is far more fragmented.
Different lenders.
Different mandates.
Different tolerances for risk.
This creates a scenario where outcomes are unlikely to be linear
but rather episodic.
And episodic markets create opportunity.
What This Means for Property Sectors
Rather than a uniform downturn or recovery, I believe we are entering a period of selective repricing, driven more by capital structure than asset type.
Office
The story remains bifurcated.
Prime assets will continue to find support, particularly where leasing has stabilised.
Secondary stock, however, remains exposed, not just to tenant demand, but to refinancing risk.
In many cases, the next buyer will not be an investor, but a balance sheet decision.
Retail
Resilience at the top end continues.
But assets reliant on discretionary spend and weaker catchments may face pressure if credit tightens and consumer conditions soften simultaneously.
The margin for error here is thinner than current yields suggest.
Industrial
Still fundamentally strong, but no longer immune.
Where pricing was driven aggressively by cheaper capital, any reset in credit conditions may result in modest yield expansion, even if underlying demand remains intact.
Healthcare & Essential Services
These assets continue to behave differently.
Not because they are “better”, but because they are tied to need, not want.
In a credit-driven environment, that distinction becomes increasingly valuable.
The Role of the Asset Manager
If the last cycle rewarded access to capital,
the next phase will reward control of risk.
Passive ownership feels increasingly outdated.
The ability to:
- structure transactions,
- work with lenders (not against them),
- reposition assets,
- and understand tenant-side realities
is no longer optional, it is fundamental.
In simple terms:
The gap between good assets and well-managed assets is about to widen.
A Moment for Patience — and Preparation
I do not believe we are at the point of broad distress.
But I do believe we are moving closer to forced decision-making across parts of the market.
And when that occurs, it will not happen everywhere at once.
It will happen:
- asset by asset,
- lender by lender,
- situation by situation.
For capital partners, this matters.
Because the next 12–24 months may not reward those who move first
but those who are prepared when others have to move.
Final Thought
For some time now, I have described this cycle as unfinished.
That still holds.
But if I had to refine that view today, it would be this:
The next chapter of this cycle will not be written by property fundamentals alone,
its sentences and paragraphs will be heavily influenced by credit.
Understanding that, and positioning accordingly may be the difference between preserving capital and compounding it.
Until Next Time,
Mark Wizel