CBRE Midyear Real Estate Outlook: Leasing Momentum to Carry Into Second Half of Year

The U.S. commercial real estate market should hold its ground and, in some cases, improve in the second half of this year despite the U.S./Iran conflict, according to CBRE’s 2026 U.S. Real Estate Outlook Midyear Review.

Higher energy prices have so far contributed to the U.S. inflation rate staying above 4% and rendered Federal Funds Rate cuts unlikely for the balance of this year. Still, key pillars of demand, including resilient consumer spending, reshoring of manufacturing, the ongoing buildout of artificial intelligence infrastructure and demographic trends benefitting healthcare, have kept commercial real estate resilient.

CBRE made midyear updates to its initial forecast from January to reflect the shifting economy and geopolitical factors. Among CBRE’s new predictions: The office market continues to benefit from soaring demand from tech companies as well as resurgent demand from financial and professional services. Industrial & logistics leasing will post a record year, reaching about 1 billion sq. ft. of total leasing. And under-construction data centers will generate an even higher preleasing rate.

Meanwhile, CBRE left its other predictions unchanged due to real estate market resilience. CBRE still expects investment-sales volume to increase by 16% for the year with construction completions hovering near 10-year lows. The company sees vacancies trending down across all asset classes, especially for good quality assets.

“The U.S. real estate market has withstood economic and geopolitical headwinds this year and is well positioned for further growth,” said Henry Chin, CBRE’s Global Head of Research. “We’re seeing strong sectors like data centers and retail continue their momentum and recovering sectors like office and life sciences make further gains. Most sectors should benefit as geopolitical issues abate.”

CBRE’s midyear update covers the economy, capital markets and eight commercial real estate sectors. Highlights of the updated forecast for each follow.

Economy: CBRE expects inflation to be higher than its original forecast of 2.5%, likely receding to 3.6% by the end of the year from above 4%. CBRE believes the Federal Reserve will hold short-term rates steady for the rest of this year rather than making the two rate cuts anticipated in CBRE’s earlier forecast. CBRE anticipates that gross domestic product will remain resilient by growing by 2.1% for the year, matching 2025.

Capital Markets: CBRE maintains its forecast for a 16% increase in 2026 investment volume, with gains of 20% in the multifamily sector, 17% in retail, 16% in office and 15% in industrial & logistics. Capitalization rates – a measure of a property’s value by dividing its annual income by its sales price – are expected to hold steady for the remainder of 2026 due to higher-than-expected benchmark interest rates, with incremental compression expected in 2027.

Office: CBRE forecasts that leasing by tech companies, which accounted for 21% of U.S. leasing activity in the year’s first half, will buoy office demand. Sixty-four percent of tech companies in CBRE’s 2026 Americas Office Occupier Sentiment Survey say they plan to expand their office portfolio this year.

CBRE sees the U.S. office vacancy rate at 18% by year end, which is 10 basis points (bps) lower than its earlier forecast. The gap between vacancy in prime and nonprime office buildings is expected to widen, demonstrating the continuous trend of flight to quality. CBRE anticipates that vacancy in U.S. downtowns will dip below that of the suburbs in 2027 due to leasing momentum, including a 24%, year-over-year gain in office leasing across U.S. downtowns in this year’s first half.

Industrial & Logistics: CBRE forecasts leasing activity to increase by 10% for the year, up from its previous prediction of a 5% gain. Strong leasing activity in the year’s first half, bolstered by gains in leasing driven by third-party logistics companies, onshoring of manufacturing – including advanced manufacturing – and the data-center buildout, has set the pace for a record year of approximately 1 billion sq. ft.

Retail: The overall availability rate – which includes vacant space as well as occupied space being marketed for use by new tenants – is expected to continue declining from 4.9% in the second quarter as new construction remains constrained. Demand will come from grocery, discounters, service retailers and fast-casual and quick-service restaurants.

Multifamily: CBRE’s updated forecast calls for vacancy to hold steady at 4.9% in 2026. The company sees rents achieving a five-year compound annual growth rate of 2.8%. Strong performance in markets including the New York tristate area, San Francisco Bay Area and Orange County, CA., has buoyed the national recovery.

Data Centers: Demand is strong to the point that CBRE anticipates preleasing rates for projects under construction will reach 80% this year, up from the previous projection of 75% and well above the historical range of 40% to 50%. Average rental rates for 250-to-500 kW facilities are expected to exceed $215 per kilowatt per month, a slight increase from the earlier forecast.

Healthcare: CBRE sees the average vacancy rate for medical outpatient buildings at 9.7% at year end, which is 17 bps lower than the earlier forecast. The largest declines in vacancy are expected in the Sun Belt due to population growth and a decline in construction.

Life Sciences: CBRE expects net absorption to increase, but not by enough to significantly reduce the sector’s high vacancy rate from previously aggressive construction. The vacancy rate is forecast to decline by 40 bps by year end to 22.5%.

Hotels: CBRE forecasts that revenue per available room (RevPAR) will increase by 2.5% for the year, up from the earlier forecast of a 1.2% gain, due to increased domestic business and leisure travel. Occupancy will increase to 62.8% and average daily rate will rise by 1.7% this year.