Global Real Estate Outlook 2026: Growth Amid Challenges in Commercial Property

Global Real Estate Outlook 2026: Growth Amid Challenges in Commercial Property

The mood around global real estate going into 2026 is notably brighter than it has been for much of the post-pandemic, rate-hike era—not because the industry’s problems have vanished, but because the market is finally learning how to function with them. Across major forecasting houses, the recurring storyline is a cautious rebound: more transactions, steadier pricing, and capital that is slowly returning—selectively—to assets and locations where the income story is credible and the path to refinancing is clear.

One of the simplest signals of that turning tide is the expectation that global investment activity will climb meaningfully in 2026. Savills’ world research outlook projects global real estate investment turnover surpassing US$1 trillion in 2026, about 15% higher than 2025 and the first time that threshold would be crossed since 2022—an important psychological marker for an industry that has spent several years digesting higher debt costs and valuation resets. That doesn’t mean markets snap back to the easy liquidity conditions of the 2010s; it means buyers and sellers are gradually finding workable price discovery again, and lenders are becoming more willing to underwrite deals where fundamentals are defensible.

A major reason the tone improves in 2026 is that the “known unknowns” are becoming less destabilizing. Higher-for-longer interest rates already did their damage—forcing repricing, freezing deals, and exposing weak capital stacks. Now, a growing share of outlook commentary treats financing conditions less like a moving target and more like a constraint to plan around. Even where uncertainty remains, it is increasingly “absorbed into expectations,” as some research frames it, which matters because markets are more comfortable transacting when the rules of the game feel stable, even if they’re not generous.

At the same time, there is a quiet but consequential shift happening on the supply side. In many mature markets, the pipeline of new commercial space is thinning—partly because high construction costs and expensive financing have discouraged development, and partly because developers can’t justify speculative building without clear preleasing. JLL’s global outlook points to declining new supply across most commercial property types in North America and Europe in 2026, with office development described as exceptionally low in the U.S. and European office starts at their lowest levels since 2010. In practice, that tightening future supply becomes a tailwind for the best existing buildings—especially those that match where occupiers are actually willing to be and how they want to work.

This is where the “growth amid challenges” theme becomes easiest to see. The industry’s recovery is not broad and uniform; it is selective, and the selectivity is the challenge. Office is the clearest example. The sector is stabilizing in the sense that activity is no longer falling off a cliff everywhere, but it is also splitting into two different businesses: trophy and obsolete. On one side, prime, well-located, high-quality buildings can command strong rents and attract tenants who are upgrading or consolidating. On the other side, weaker buildings—poorly located, inefficient, or out of step with modern expectations—struggle with vacancy and value impairment, often requiring conversion, heavy reinvestment, or an entirely different use. That bifurcation is explicitly highlighted in the PwC–ULI “Emerging Trends in Real Estate 2026” release, which describes a divided office market where top-tier buildings capture record rents even as overall valuations remain well below pre-pandemic peaks.

In the U.S., where data is especially visible, Colliers’ 2026 outlook frames the story as a “reset” rather than a simple rebound. It projects transaction volume growth of roughly 15–20% in 2026 as pricing stabilizes and investors return, and it expects office vacancy to edge down from a 2025 peak to below 18% by the end of 2026, helped not only by demand but also by the removal of obsolete stock through conversions and repositioning. That “removal of inventory” idea matters: it’s a reminder that recovery can come from supply shrinking as much as from demand growing.

Industrial and logistics, often the poster child of the last cycle, is also moving into a more balanced phase. After an extraordinary run, vacancy and rent growth are normalizing as new space delivered and demand patterns matured. But normalization isn’t the same as weakness—especially when development slows sharply. Colliers notes industrial construction is down significantly from earlier highs and suggests vacancy may peak around the mid-single digits (around 7.6% in its outlook framing), implying an approach toward equilibrium rather than a glut. JLL similarly points to a cooling in industrial deliveries globally, with 2026 deliveries expected well below recent peak levels, partly because speculative construction has become harder to justify and land is increasingly competed for by other uses such as data centers and manufacturing.

Retail, which many wrote off too quickly, continues to earn a grudging respect in forecasts because it has one crucial ingredient: supply discipline. Years of underbuilding in many mature markets have left little new space coming, which can support occupancy and rents when consumer spending holds up. Colliers expects retail construction to drop further in 2026 and frames that tight supply as supportive of modest rent growth. In a world where investors are paying close attention to income durability, “boring but leased” has regained appeal.

Then there are the “new defensives” and “new growth” sectors that are increasingly central to 2026 optimism. Data centers sit at the intersection of both: they are infrastructure-like in their cash flow profile when well leased, but also growth-like because demand is being pulled forward by AI and cloud computing. The PwC–ULI release emphasizes surging demand alongside constraints—particularly power availability and supply bottlenecks—with very low vacancy and pre-leasing that keeps rents firm while simultaneously making development harder and more competitive. This is exactly the kind of sector that fits the 2026 market psyche: strong demand, scarce supply, and underwriting that can be justified even when capital is not cheap.

Demographics are equally powerful in shaping the next leg of demand. Senior housing is repeatedly flagged as approaching an inflection point, with the first baby boomers turning 80 in 2026—an age milestone that tends to accelerate needs-based housing and care decisions. For investors, that creates a long runway story, but not an effortless one: operating models, staffing, affordability, and regulation all still matter. The optimism here is grounded in demand fundamentals, while the challenge is execution.

Capital flows add another layer to the more positive trend. Deloitte’s commercial real estate outlook highlights that roughly three-quarters of surveyed respondents planned to increase real estate investment over the next 12–18 months, often citing inflation-hedging and diversification benefits, and it identifies markets such as India, Germany, the UK, and Singapore among top cross-border targets. It also points to “dry powder” and the growing role of private credit as the industry navigates maturities and refinancing needs—an important detail because the 2026 opportunity set is not only about buying buildings, but also about providing capital into stressed or transitional situations.

This is where the “challenges” part of your theme is most real: refinancing and liquidity are still uneven. Even as forecasts tilt positive, not every market or owner will enjoy the recovery at the same time. MSCI’s 2026-oriented commentary underscores that, describing 2026 as still challenging overall for real estate, even while opportunities to re-enter emerge as pricing adjusts and capital markets stabilize—essentially saying the door is opening, but it’s not wide open. And the day-to-day reality in some places can look ugly even in a broadly improving cycle. For example, recent UK data showed construction activity in contraction through late 2025, with commercial building particularly weak—an illustration of how high rates, fragile confidence, and delayed decisions can keep real-economy property indicators soft even as investors begin to anticipate better conditions.

Put all of that together, and the most accurate way to describe the 2026 global real estate outlook is not “boom” but “functioning recovery.” The industry is transitioning from shock management to strategy again. Occupiers are making clearer choices—often fewer locations, higher quality, and better-aligned space. Owners are prioritizing leasing, capex discipline, and operational performance because returns are less forgiving. Investors are returning, but with sharper filters: modern space over commodity space, durable income over speculative stories, and sectors with structural demand over sectors hoping for a cyclical bounce.

The narrative also explains why the outlook can be optimistic without pretending risks have disappeared. Geopolitical surprises can still freeze decision-making. Energy constraints can bottleneck data-center growth. Construction costs can limit new supply but also make redevelopment expensive. And the office transition can produce winners and losers in the same city block. Yet the underlying forecasts suggest that 2026 is likely to reward those who treat real estate less like a one-way bet on cap-rate compression and more like a long-duration business: identify demand that is truly sticky, own assets that fit it, and finance them in a way that can survive an imperfect world.