Fortune Will Favor the Bold

Economic forecasting is far from an exact science, particularly in this age of heightened geopolitical disruption and frequent swings in government policy. 2025 was a perfect example: While the general outlook for increased commercial real estate investment and leasing activity was dead on, the year’s many sudden events precipitated changes to sector-specific forecasts.

The need for forecasters to remain just as agile in 2026 will be paramount.

CBRE’s current outlook is for GDP growth at around 2%, inflation nearer the Fed’s 2% target and a slightly softer job market. We expect this to translate into a broad commercial real estate recovery in 2026, highlighted by increased leasing activity, improved market fundamentals, lower cap rates and a 16% rise in investment volume.

Investors are particularly well-positioned to seize opportunity in 2026.

Investors are expected to increase their capital allocations to real estate this year as sellers get more realistic on pricing. And this expectation is supported by anecdotal evidence: Last year, CBRE signed the most confidentiality agreements with prospective property buyers since 2022.

Of course, any growth in investment activity hinges on the debt markets, which we expect will remain healthy with lower interest rates and tighter spreads. Banks will grow their commercial real estate loan portfolios, while alternative lenders and other sources of debt capital will remain active.

All this will be supplemented by ample reserves of dry powder, creating a suitable environment for deals to get done. Ninety-five percent of investors responding to CBRE’s 2026 North America Investor Intentions Survey, releasing later this month, said they expect to either increase or maintain their buying activity this year.

Several sectors that have withstood major challenges in recent years are poised for a rebound in 2026.

In particular, the office and retail sectors are primed for growth as they continue to shrug off pandemic-era disruptions. The percentage of investors surveyed by CBRE who prefer these sectors grew the most over the past two years.

Prime trophy office will remain highly sought by occupiers. And with less available supply of top-quality space, we expect demand to spill over to well-located Class A buildings.

Last year, demolitions and conversions of obsolete office assets outpaced new construction for the first time since CBRE began tracking the office market in 1988. More than just a headline, this represented an inflection point for the broader U.S. office market. Limited supply, declining vacancies and growing usage rates tell us that office has started its long crawl back to equilibrium.

Meanwhile, the retail sector’s strong fundamentals—historically low availability, limited new construction and positive net absorption—position it well this year. But budget-conscious consumers will also drive retailers’ decision-making, especially in the face of high buildout costs and a slowing labor market.

Grocery-anchored, neighborhood & strip and open-air centers in high-income suburbs will be particularly attractive investment targets. Anecdotally, core fund managers have been out-bid by core-plus and value-added players for retail assets.

At the same time, durable demand and secular tailwinds will shore up the industrial, data center and healthcare sectors.

Despite oversupply, modern industrial buildings will remain a key investment target, while the growing use of artificial intelligence will boost demand for data centers and an aging U.S. population will require more medical facilities.

We expect a 5% year-over-year increase in industrial leasing activity this year to nearly 1 billion sq. ft. This will slightly offset the sector’s oversupply of vacant new space. The prospect of more accommodating trade policy and 2% economic growth should also benefit the sector, as well as increased outsourcing of warehouse and distribution operations to third-party logistics operators.

U.S. data center leasing is expected to hit record highs in 2026, with preleasing of new construction in the mid-70% range. AI-related occupiers will continue to vie for what few large blocks of contiguous capacity are available. If occupiers want a lot of capacity quickly, they’ll have to generate their own power, which should make less-regulated energy markets across the Sun Belt particularly attractive, as well as those with substantial natural gas resources.

In the healthcare sector, the “Silver Tsunami”—a major U.S. demographic shift in which the number of people aged 75 years or older is growing by more than 1 million per year—will support the medical outpatient building sector for years to come. Historically low construction completions, high construction costs and uncertain U.S. healthcare policy will pressure cost-sensitive providers to consider older office buildings and retail conversions.

A focus on cost will also extend to the multifamily sector, which will see positive net demand as people face the decision to either spend more each month to buy a home or continue renting. Tepid job growth will likely have them opt for the latter in the first half of the year, though it will also hamper domestic migration and household formation.

As the commercial real estate market rebounds, fortune will favor the bold.

Across all sectors, an overall drop in new construction will bring value-add opportunities for investors with sizable capital reserves. And once their pro forma returns are met, investors should consider selling. This will maintain market liquidity and enable them to shift their attention to new opportunities.

For occupiers, the time to lease is now. As we’ve already seen in certain gateway markets, rent growth is expected to accelerate across all sectors and those that continue to delay leasing decisions will have a larger potential liability on their balance sheets than necessary. Options for top-quality office and retail space in prime locations will be limited, while oversupply of industrial space won’t last long in the face of rising demand.

The bottom line is that we have an optimistic outlook for the economy and the commercial real estate industry in the year ahead. Investors and occupiers have a lot to look forward to in 2026, and the time to act is now.