When market conditions shift, how quickly can your team reforecast?
Budgeting for 2026 isn't just about forecasting income and expenses. It's about building resilience into your assumptions.
A recent piece from Forte Real Estate Partners outlines six key considerations for commercial real estate owners heading into the new year. The themes will sound familiar to anyone navigating today's market: rising insurance premiums, persistent operating cost pressures, and the need to stress-test budgets against multiple scenarios.
Insurance premiums climbed more than 5% in Q1 2025, and there's little indication that trend will reverse. Add in labor costs, utility expenses, and property tax increases, and you have a recipe for margin compression if your budget doesn't account for variability.
One line from the Forte article resonated: "Adjust revenue projections conservatively and build in buffers for inflation and interest rate volatility."
That's sound advice. But the real question is: how quickly can your team act when those assumptions need to change?
Traditional budgeting approaches treat the annual budget as a fixed target. But markets don't operate that way. When insurance costs spike mid-year or a major tenant signals they won't renew, static budgets leave teams scrambling to understand the downstream impact.
Scenario-based budgeting flips this model. Instead of one set of assumptions, you maintain multiple versions: a base case, an optimistic case, and a conservative case. When conditions shift, you already have a framework for understanding what it means for cash flow, distributions, and capital planning.
The Forte piece also highlights the importance of using inspection data to inform capital expense decisions. This is another area where dynamic budgeting tools prove their value. When you can tie physical asset conditions directly to your financial projections, you move from reactive maintenance to strategic capital allocation.
At Kardin, we help commercial real estate teams do exactly this: run scenarios, adjust assumptions quickly, and keep budgets aligned with reality as market conditions shift. Whether you're managing a single asset or a diversified portfolio, the ability to reforecast on the fly is no longer a nice-to-have. It's essential.
If you're deep in budget season, take a few minutes to read the full Forte article (linked below). Then ask yourself: if your assumptions changed tomorrow, how long would it take your team to understand the impact?
Read the full article: Smart Budgeting for Commercial Real Estate Owners in 2026
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