BOSTON–The U.S. commercial real estate sector is poised to enter 2026 with renewed strength, improving visibility, and growing confidence across leasing and capital markets, according to Cushman & Wakefield’s newly released U.S. Outlook 2026.
After a year marked by tariff uncertainty, shifting policy signals, tighter immigration flows, and periods of financial market volatility, the firm says the industry is finally transitioning from “resilience to optimism.”
Despite macroeconomic turbulence, the U.S. economy outperformed expectations in 2025. Real GDP is projected to grow 1.9% in 2025 and 1.7% in 2026, bolstered significantly by AI-driven investment, which Cushman & Wakefield reports accounted for more than half of GDP growth this year.
A Market Emerging From Uncertainty
“As we head into 2026, the tone has shifted meaningfully,” said Kevin Thorpe, Chief Economist at Cushman & Wakefield. “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 stabilizing or improving.”
Capital Markets Reignite After Two Years of Tight Conditions
The industry’s capital markets saw a meaningful turnaround in 2025:
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Lending volume rose 35% year-over-year as debt costs eased and lenders re-entered the market.
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Institutional sales increased 17% through October.
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Pricing has reset, presenting stronger income-generating opportunities.
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Motivated sellers—driven by portfolio adjustments or selective distress—are creating attractive entry points for investors.
“CRE is now fairly priced,” said James Bohnaker, Principal Economist at Cushman & Wakefield. He noted that the market is not facing an overbuilding problem; in certain areas, it is underbuilding, which should fortify fundamentals under most scenarios.
Leasing Markets Tighten—Especially for High-Quality Space
Though some office and industrial markets still carry elevated vacancies, Cushman & Wakefield warns the window for tenants to secure favorable terms may soon narrow. Occupiers are becoming more decisive, prioritizing modern, well-located, high-quality spaces, even as new supply dwindles.
Office: Flight to Quality Accelerates
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Class A buildings in many cities are nearing full occupancy.
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The U.S. office construction pipeline is at its lowest level since the 1990s, with just 20 million sq. ft. expected to deliver between 2026–2028.
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Markets such as San Francisco, San Jose, Austin, New York, Atlanta, Dallas, and Nashville posted strong positive absorption in 2025, helped by AI-sector growth and robust job creation.
“For large office users looking to secure high-quality space, the message is clear: act decisively,” Bohnaker said.
Industrial: Demand Rebounds as Tariff Pressure Eases
Industrial leasing surged late in 2025, posting the strongest quarterly absorption in over a year. Cushman & Wakefield revised its 2026–27 demand forecast 70 million sq. ft. higher than midyear estimates.
Key dynamics ahead:
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New supply will fall sharply to half the pace of 2022–25.
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Land competition is rising as data center developers and industrial users vie for power-rich locations.
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Inland hubs such as Dallas, Chicago, Phoenix, Atlanta, and Reno remain strong, while coastal ports face softer rents and rising costs.
Multifamily: Fundamentals Remain Strong
Multifamily absorption continues near record highs, driven by:
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High mortgage rates
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Severely limited for-sale housing
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Demographic tailwinds
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Construction starts down two-thirds from peak levels
Cushman & Wakefield expects rent growth to reach 5% by 2027 as supply tightens.
Retail: Stable With Opportunities in High-Quality Assets
Retail fundamentals remain steady, with national occupancy near long-time highs and construction limited. Even with flat-to-negative net absorption related to big-box bankruptcies, leasing activity, rent growth, and mall-sector performance all improved in 2025. Grocery-anchored centers and top-tier malls remain standout opportunities.
A Clearer Path Ahead for 2026
Cushman & Wakefield’s baseline outlook—given a 50% probability—calls for:
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Continued economic expansion
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Inflation easing
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A more supportive policy environment
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Stabilizing tariff adjustments
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Federal Reserve rates drifting toward a neutral 3% by late 2026
“With better visibility, capital confidence returning, and supply waves receding across key asset types, the backdrop for commercial real estate in 2026 is the strongest it has been in years,” Thorpe said. “The opportunities are broadening for both occupiers and investors.”
As 2025 closes, Cushman & Wakefield’s analysis suggests the CRE sector is no longer simply enduring—but positioning itself to grow.
