<div id="readability-page-1"><span></span><div><p><em>A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. </em><em>Sign up</em><em> to receive future editions, straight to your inbox.</em></p><p>The 2025 economy wasn't as robust as anticipated — and that's shaping the commercial real estate outlook for 2026. The economy has slowed down, unemployment is up and construction has taken a bit of a breather across most sectors. </p><p>This year saw increases in both tariffs and immigration restrictions. Together, those have raised costs for builders and developers. But interest rates have also come down, which is starting to unlock more capital, albeit slowly and cautiously. </p><p>Here's what you can expect for the year ahead. </p></div><h2>General investment</h2><div><p>The many and varied outlook reports from just about every commercial real estate firm out there, as well as related consulting and financial services firms, use words like &#34;new equilibrium&#34; (Colliers), &#34;firmer fundamentals&#34; (Cushman &amp; Wakefield), &#34;ongoing recovery&#34; (KBW) and &#34;signs of price stability&#34; (CoStar).</p><p>Looking at specifics for the year ahead, CRE leaders are slightly less optimistic than they were ahead of 2025, according to a Deloitte survey of 850 global chief executives and their direct reports at major real estate owner and investor organizations across 13 countries. Eighty-three percent of respondents said they expect their revenues to improve by the end of 2026 compared with 88% last year. Fewer respondents said they plan to increase spending, while more expect to keep spending flat. Still, 68% said they anticipate higher expenses in 2026.</p><p>Most respondents said they do expect the cost of capital to improve, and growth is expected across most asset classes. Overall sentiment is down from last year but well above that of 2023, according to the Deloitte survey.</p></div><div><div id="SpecialReportArticle-RelatedContent-1"><div><div><h2>Get Property Play directly to your inbox</h2><div><p>CNBC's Property Play with Diana Olick covers new and evolving opportunities for the real estate investor, delivered weekly to your inbox.</p><p>Subscribe here to get access today.</p></div></div></div></div></div><div><p>Looking specifically at the U.S., the commercial real estate sector is entering 2026 with renewed momentum, clearer visibility and growing optimism across both leasing and the capital markets landscape, according to a forecast from Cushman &amp; Wakefield. It notes that despite uncertainty surrounding tariffs, a volatile policy backdrop, tightening immigration and episodes of financial market stress this year, the economy was more resilient than expected, driven in large part by artificial intelligence. </p><p>&#34;As we head into 2026, the tone has shifted meaningfully,&#34; said Kevin Thorpe, chief economist at Cushman &amp; Wakefield. &#34;There is still risk on both sides of the outlook, but we've moved past the peak levels of uncertainty, and confidence in the CRE sector is building. Capital is flowing again, interest rates are moving lower, and leasing fundamentals are generally stabilizing or improving. If 2025 was a test of resilience, 2026 has real potential to reward it.&#34; </p><p>Capital is re-engaging, according to Colliers, which predicts the industry is, &#34;entering a new equilibrium.&#34; Forecasters there point to the bottoming out of office demand and new growth in industrial, thanks, again, to AI.  </p><p>PwC also emphasizes that capital began flowing again in the second half of this year, &#34;but selectively.&#34;</p><p>&#34;The deal environment rewards those who can combine data-driven insight with strategic conviction. For clients, the challenge—and the opportunity—is to navigate a landscape where liquidity, technology, and consolidation are redefining the meaning of value creation in real assets,&#34; according to a PwC report.</p><p>The share of investors who say they expect to increase their commercial real estate investments over the next 6 months fell in the fourth quarter of this year from the previous quarter in every sector except retail, according to a survey from John Burns Research and Consulting. Multifamily investor sentiment weakened for the 4th consecutive quarter.</p><p>&#34;Investors cited headwinds that included elevated interest rates, economic uncertainty, and local regulatory burdens. 49% of investors expect to hold their CRE exposure at the current level over the next 6 months, in line with the past two quarters,&#34; according to the report.</p></div><h2>Capital markets</h2><div><p>&#34;Capital Markets Reawakening&#34; – that's the headline from Colliers, which says pricing has found a floor and deal velocity is rising. Colliers forecasts a 15% to 20% increase in sales volume in 2026 as institutional and cross-border capital re-enters the market.</p><p>Cap rates seem to be ready to move lower next year, according to a forecast from CoStar. Its data is already showing hints of this in the multifamily and industrial sectors, where vacancies have peaked and rent growth is picking up.</p><p>CoStar also notes deal activity is picking up, with third-quarter sales volume up more than 40% year over year, and banks are &#34;easing back into commercial real estate lending,&#34; according to the report. </p><p>Bond markets are following suit, showing new appetite for risk. CoStar points to the narrowing spread between government and corporate bond yields to roughly 1 percentage point (well below the historical average), &#34;typically a precursor to greater real estate investment and firming prices.&#34;</p><p>This tracks with the Cushman &amp; Wakefield outlook, which also notes that in 2025 debt costs eased, lenders re-entered the market, and institutional capital returned, &#34;supporting a broad-based revival in deal activity.&#34; </p><p>Lending was up 35% year over year, institutional sales activity increased 17% through October, and pricing has &#34;largely reset, presenting the market with compelling opportunities for yield and income generation,&#34; Cushman &amp; Wakefield found. </p></div><h2>Specific sectors</h2><div><p>The office market is now widely believed to have bottomed, and assets are showing early signs of price stability.</p><p>Vacancy rates are expected to drop below 18% as more tenants return to the market, leverage expiring leases and prioritize hospitality-driven workplaces that support hybrid work, according to Colliers.</p><p>There will continue to be a flight to quality in office, as Class A buildings in many markets are now nearly fully occupied. Office construction is also at its lowest level in over three decades, according to Yardi.</p><p>Cushman &amp; Wakefield forecasts continued growth in San Francisco; San Jose, California; Austin, Texas; New York; Atlanta; Dallas, Texas; and Nashville, Tennessee, which posted strong positive absorption in 2025, supported by AI expansion and diversified job growth.</p><p>&#34;For large office users looking to secure high-quality space, the message is clear: if you find the right space, act decisively,&#34; said James Bohnaker, principal economist at Cushman &amp; Wakefield. &#34;There is strong demand for new, high-quality space and not enough of it to go around. And given the limited construction pipeline, it's going to get even tighter.&#34;</p><p>Industrial has also seen a huge drop in construction, down 63% since 2022, according to the Colliers report.  Vacancy is peaking and net absorption is set to jump to 220 million square feet, as reshoring, manufacturing, and data centers fuel demand.</p><p>Retail is already undergoing a major shift in how and where companies are leasing space, according to Brandon Svec, national director of U.S. retail analytics at CoStar. </p><p>He points to nearly 26 million square feet of ground-floor retail leased in non-traditional properties in the first three quarters of 2025, including multifamily, student housing, hospitality and office. </p><p>Retailers are embracing smaller footprints, with the average retail lease signed over the past four quarters falling below 3,500 square feet for the first time since CoStar began tracking this in 2016. This is being driven largely by restaurant and service operators such as Starbucks, Chipotle, Chick-fil-A, Jersey Mike's, Dunkin' and McDonald's, according to Svec, who noted the growing appeal of walkable, mixed-use retail environments over traditional big-box formats. He does have a warning though.</p><p>&#34;Significant uncertainty remains around the impact of tariffs on an already fragile consumer. While suppliers and retailers have largely absorbed these costs to date, many have signaled that price increases are imminent. With consumers already showing some signs of spending fatigue, tariff-related price hikes could further strain household budgets and dampen discretionary spending,&#34; Svec wrote in a report. </p><p>Multifamily rents are starting to ease, as a record level of new supply continues to make it through the pipeline. </p><p>&#34;Multifamily has led investment sales volume since 2015, and there are no signs of this changing. However, its share of total volume is expected to ease somewhat as investors allocate more capital to office, data centers, and retail,&#34; according to the Colliers report.</p><p>Data centers have been the darling of 2025, with demand significantly outpacing supply. Deloitte called the sector, &#34;a clear bright spot in the U.S. commercial real estate landscape.&#34; It pointed to nine major global markets where 100% of the new construction pipeline is already fully pre-leased. </p><p>Data centers do, however, face headwinds in financing, grid capacity, zoning and local politics. </p><p>&#34;Friction is building as communities push back on data center development. A few projects have already been abandoned, and more are expected to be shelved in 2026,&#34; according to the Colliers forecast.</p></div><h2>REITs</h2><div><p>Public-to-private REIT transactions and portfolio mergers are likely to dominate in the year ahead as listed valuations lag private-market pricing, according to a report from PwC. That will be driven by considerations of scale, governance credibility and cost of capital. </p><p>&#34;Expect accelerated M&amp;A as capital concentrates, AI exposes inefficiencies, and platforms converge—real assets are entering a new phase defined by intelligence, integration, and scale-driven opportunity,&#34; wrote Tim Bodner, global real estate deals leader at PwC.</p><p>As for the REIT stocks, they were the real laggards of 2025, but could be poised to outperform in 2026, according to a forecast from Nareit, the REIT industry association. It points to a divergence between stock market valuations and REIT valuations and an ongoing divergence between public and private real estate valuations. </p><p>&#34;These will close, and one or both could happen in 2026. If they do, we expect REITs to outperform based on our own historical analysis and their ongoing strong operational performance and balance sheets,&#34; the report said.</p></div></div>

CIGI

<p>Experts predict stabilization and recovery for commercial real estate in 2026, following a less robust 2025 economy. Despite challenges like increased tariffs and immigration restrictions, lower interest rates are unlocking capital. A Deloitte survey shows 83% of real estate executives expect revenue growth, though fewer plan to increase spending. Cushman & Wakefield notes renewed optimism in the U.S. CRE sector, with capital re-engaging and leasing fundamentals improving. Colliers forecasts a 15-20% increase in sales volume as pricing stabilizes and deal activity rises, particularly in multifamily and industrial sectors.</p>

Here’s what to expect for commercial real estate in 2026