What To Expect For Commercial Real Estate In 2026

The 2025 economy fell short of expectations, impacting the commercial real estate (CRE) outlook for 2026. Economic slowdown, rising unemployment, and a pause in construction have characterized this period. Increased tariffs and immigration restrictions have raised costs for builders, although declining interest rates are slowly unlocking more capital.

The U.S. CRE sector enters 2026 with renewed momentum and optimism in leasing and capital markets. Cushman & Wakefield points to the economy’s resilience, partly driven by AI. Kevin Thorpe, their chief economist, noted, “Confidence in the CRE sector is building, with capital flowing again and leasing fundamentals improving.”

Colliers mentions that the industry is “entering a new equilibrium,” indicating a potential bottoming out of office demand while the industrial sector shows growth due to AI. PwC states that capital began flowing again selectively in the latter half of this year. Investor sentiment has weakened, with fewer expecting to increase their investments over the next six months, particularly in multifamily sectors. CoStar predicts lower capitalization rates next year, particularly in multifamily and industrial sectors. Deal activity is rising, with third-quarter sales volume up over 40% year-over-year. Banks are re-entering the CRE lending market. Bond markets also show a renewed interest in risk, indicated by a narrowing yield spread between government and corporate bonds—typically signaling increased real estate investment.

Overall, as debt costs ease and institutional capital returns, a revival in deal activity appears likely for 2026.

Source: CNBC

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