AI boom may keep real estate borrowing costs elevated, Break of Day Capital says
TLT•Break of Day Capital said AI infrastructure spending could keep multifamily financing costs elevated even if the Federal Reserve cuts rates. Major hyperscalers are expected to issue about $279 billion in corporate bonds in 2026, compared with $17 billion in 2024.
1. Financing cost outlook
Break of Day Capital warned that AI infrastructure spending could intensify competition for capital and keep multifamily financing costs elevated, even if the Federal Reserve cuts rates. The brief said major hyperscalers are expected to issue approximately $279 billion in corporate bonds in 2026, versus $17 billion in 2024.
2. Rates and underwriting
The Federal Reserve held its benchmark rate at 3.75%-4% on October 28, 2026, as inflation remained elevated. The 10-year Treasury yield remained near or above 5%, pressuring commercial real estate valuations, according to CBRE’s October 2026 analysis. Break of Day Capital said multifamily investors should prioritize conservative underwriting, manageable debt structures and adequate reserves rather than rely on future rate cuts.
