On Nov. 14, Bisnow Editor-in-Chief Mark Bonner sat down with Origin’s co-CEO, Michael Episcope, to discuss the economic fallout from the historic government shutdown and how it is shaping the outlook for commercial real estate in 2026. In this candid conversation, Michael offers a grounded view of what the disruption reveals about political dysfunction, how it’s shaping investor psychology, and why disciplined multifamily operators may find themselves positioned for opportunity as the market stabilizes heading into 2026.
Listen to the full interview on Bisnow’s First Draft Live podcast.
What does the shutdown reveal about the economy, and how is Origin navigating it?
Michael Episcope: What it really reveals isn’t so much the fragility of the U.S. economy as the dysfunction of our political system. That’s the elephant in the room. What happened to 800,000 federal workers was tragic. None of that was necessary; it was entirely within the control of politicians, and it never should have happened.
For a firm like ours, it’s more annoying than catastrophic. We were launching our interval fund (before the shutdown), and we were at the one-inch line to get SEC approval. That’s been delayed. We don’t even know if we’re going to pick up where we left off or get pushed back to the 50-yard line. But we will launch it. For Origin, this is a speed bump, not a COVID-style crisis. That doesn’t mean the damage isn’t real, though. You are wiping out growth that we don’t need to lose, and some of the hit to the GDP is permanent.
Is this just another speed bump for CRE or a structural dent?
It’s both. It feels like we’ve been operating on a street with nothing but speed bumps for the last few years, and we’re waiting for a clear road so we can put the pedal to the metal. And we all are looking at 2026, with some multifamily supply getting cleaned up, growth coming back and some normalcy. But there are structural implications, especially in markets that rely heavily on the federal government. If you’re in Washington, D.C., Maryland or the Northeast, and you’re building or operating multifamily, you’ve got 10% to 15% delinquencies and rising vacancies. You have to rethink your strategy in those markets because this isn’t going to stop.
This shutdown was about appropriations, but next year we’re going to have to deal with this debt ceiling again. If the government shuts down—they’re talking about this happening again in January—it’s going to be very hard to be an owner of multifamily real estate on the Eastern seaboard.
How do you handle the statistical blackout and missing government data?
Origin isn’t as impacted by the monthly release of government data, because in real estate, you’re making three-, five-, 10-year, 20-year bets. Ultimately, what matters in investing is that A, you’re in a good asset class; B, you’re in a good market; and C, you have a great micro location. It’s annoying not having the Bureau of Labor Statistics data, but it’s less impactful for groups like ours. We’re not looking at the month to month; we’re looking out on the horizon.
With another shutdown possible, when does deal flow normalize? Do you keep transacting?
We’re not making any big bets right now. The likelihood is another government stalemate or shutdown at some point. The real issue here can be just a loss of confidence in the U.S. economy. We’re starting to see that show up in interest rates. And again, it comes back to debt dysfunctionality. We’ve seen a lot of selling of U.S. Treasuries.
We will get through this. But when developers have to carry properties for another two to six months because of government delays, you’re talking about another 5% to 7% in carry costs. Some are better equipped to withstand these issues than others. The flipside to this is that it could lead to some great buying opportunities next year for investors.
How important is the next Fed meeting?
Not as important as you’d think. The Fed only has control over the short end of the curve, and we’ve seen that the long end will do what it wants. As long as investors are getting 4% or 5% on a pre-tax basis, they’re pretty happy. If they start earning 1% or 2%, they will start looking at risk assets more and more. The biggest thing we saw, especially in COVID when rates went to zero, is that money flooded in. It also helped that the government wrote $7 trillion worth of checks. But that flow has ceased in multifamily real estate and across real estate because the cost of capital is so much higher. If you can’t deliver returns in the high teens, you’re won’t attract capital to your deals.
Why does the industry obsess over interest rates?
Real estate is a leverage game. It impacts your cost of debt, your ultimate cash flow in deals, and your valuation, because there is a correlation between your interest rates and cap rates. At times they become disassociated with one another, but it’s one of the leading indicators. The correlation between cap rates and Treasuries is a great forward-looking indicator of real estate investment performance. When that spread widens—meaning your cap rates are much, much higher than your interest rates—that’s a good sign. You see that during distress when cap rates might be 6% or 7%, but borrowing costs are 4%.
Today the spread between cap rates and Treasuries is around 100 to 120 basis points, within normal range. Returns in this sector are likely to achieve historically decent averages going forward. And I think 2026 is going to be a good vintage for multifamily.
What are the underappreciated after-effects of the shutdown?
What always happens is that anytime something gets shut down, you create pent-up future demand. We will certainly see lower GDP this year as a result. And next year some of that pent-up demand will show up in a rebounding fashion—and, hopefully, a lot of construction starts in Q1. What are the most impactful things? The U.S. debt ceiling—what’s going to happen next year? That’s the next thing to look at. As our debt grows, we have to be cognizant that there will be a reckoning.
What does 2026 look like for the calm, disciplined investor?
I think 2026 is going to be better than 2025. The fundamentals are setting up to be far more favorable. Regardless of what happens to the government—there’s always an X factor—it’s going to be better than 2024. And it’s certainly going to be better than 2023. The market is showing signs of recovery. Supply is starting to dwindle. And there is still one of the biggest challenges in the economy: Owning a home is incredibly expensive. Renting is way, way cheaper. So that rent-to-own gap is fueling demand for rentals. If you go to Nashville right now, you’ll get three months of free rent. That will slowly disappear.
I’m optimistic. I don’t think this is going to be a V-shaped recovery. We’ve been skipping on the bottom, and we’re going to start to leave the bottom. If you watch public REITs, I believe you will see them go up over the next year.
Key Takeaways
- The shutdown exposed political dysfunction more than economic fragility, with uneven impacts across industries.
- Missing federal data is inconvenient but not materially disruptive to long-term real estate investing decisions.
- Deal flow remains cautious amid the likelihood of future government stalemates and broader concerns about the U.S. economy.
- The Fed’s short-term rate decisions matter less than broader market forces; capital is scarce unless projects can deliver high returns.
- Pent-up demand will likely lift GDP and spur construction starts once uncertainty eases, though the debt ceiling remains a major risk.
- Multifamily fundamentals should improve into 2026, supported by limited supply, strong rental demand, and a widening rent-to-own cost gap. Public REIT performance suggests early signs of market stabilization.
