The door has thankfully closed on 2025. We say goodbye to a year that saw unpredictable tariff policy, a government shutdown, continued downward repricing of assets, and stubbornly high interest rates for most of the year. Industry experts are looking toward 2026 as the “new dawn,” where stabilizing fundamentals may finally begin to outpace economic uncertainty.
We combed through the predictions of leading researchers, trusted publications, and investors to provide insight into what to expect in the coming year. Keep in mind, however, that these are predictions. No one predicted that the Kansas City Chiefs would miss the playoffs, while the Patriots, Bears, and Jaguars would make the playoffs as 2- and 3-seeds, no less. And while the data center market is garnering the lion’s share of headlines as the darlings of investors, we’re narrowing our focus to the overall market, as well as our specialties, industrial and office, and the lending environment.
Overall Outlook
In its annual report, Emerging Trends in Real Estate 2026, PwC and the Urban Land Institute (ULI) predict a period of cautious recovery as the market moves beyond the interest-rate-driven repricing cycle. However, the industry still faces a “fog” of economic uncertainty, leading experts to characterize investment prospects as generally fair but improving.
“Economic uncertainty looms large over the U.S. economy amid stark changes to fiscal, trade, and immigration policy, generating a fog over the path forward,” the report states. “In this cycle, real estate continues to offer development and investment opportunities, but requires navigating through the fog.”
In its 2026 sentiment survey and forecast, Deloitte echoes that trade and regulatory uncertainties have complicated decision-making. “We do not expect this to abate any time soon as trade negotiations and legal challenges continue.” Despite this climate of uncertainty, the survey found that approximately 65% of industry leaders expect fundamentals such as leasing activity, rental rates, vacancies, and cost of capital to improve through 2026. “Despite macroeconomic uncertainties, CRE fundamentals don’t change overnight,” the report states, “and growth is still expected across most asset classes and most geographies.”
Moody’s forecasts U.S. economic growth of 1.8% in 2026, partly due to lower short-term interest rates and stable long-term rates. Although loan delinquencies will remain high, a combination of continued economic growth “will support borrowers’ ability to refinance their commercial real estate loans in 2026, leading to securitization performance.” However, the report cautions that the economy will slow due to soft hiring and income growth.
Industrial Outlook
For the industrial sector forecast, we turned to Prologis’ Bold Predictions for 2026. While the entire article is well worth a read, here are some of the highlights from the report:
Demand in gateway U.S. markets will increase significantly, driven by absorption of modern Class A logistics space.
Prologis predicts that 2026 will see U.S. warehouse utilization hit expansionary levels (surpassing the 85.5% threshold). As customers max out their current footprints, a new wave of net leasing is expected to drive demand in major gateway markets, like New Jersey and the Inland Empire, to a three-year high, with access to dense population centers, improved availability of modern stock, and rents that have adjusted to more sustainable levels.
Power is the New Priority
Location choice is no longer just about highway and rail access; it’s about the grid. “Power requirements for logistics users continue to increase, not just in advanced manufacturing segments and data centers, but for traditional logistics uses as well, as automation, HVAC, and new technologies add to energy requirements.” Prologis predicts that energy readiness will become one of the top three location factors. Facilities capable of supporting heavy automation and microgrid-powered resilience will command significant rent premiums, as 90% of executives now say they would pay more for sites with reliable power infrastructure.
E-Commerce Will Drive Demand
Online shopping is expected to drive nearly 25% of all new leasing in 2026. As global e-commerce penetration nears 20%, major players are shifting toward close-to-consumer regional hubs to mitigate last-mile strain and accelerate high-throughput operations.
Defense and “Reshoring” Corridors
A notable new trend for 2026 is the revival of industrial corridors driven by defense spending and localized manufacturing. This is creating a new class of specialized logistics assets in the U.S. designed for heavy production rather than just simple storage. “Elevated Department of Defense spending should support steady demand, with activity expanding beyond large prime contractors as defense technologies evolve. A growing number of small and midsize defense suppliers are entering the market and leasing industrial space to support localized, secure supply chains. In 2024, Los Angeles County received the most defense funding in the U.S., with its deep aerospace manufacturing base.”
Shrinking Trucking Capacity Will Drive Freight Hikes in 2026
The number of U.S. truckers is declining rapidly as the freight recession enters its third year and new regulations, such as the English-language requirement, push a significant percentage of truckers out of the industry. Prologis predicts this will drive double-digit freight rate increases in 2026, making transportation an even larger share of total supply chain spend and amplifying the value of well-located logistics real estate.
Supply chains are going through the biggest reset in a generation, and it comes down to three things: energy reliability, AI and location. The new priority is resilience — building networks that can adapt and endure.
Office Outlook
CNBC’s Diana Olnick reports that “the office market is now widely believed to have bottomed and assets are showing early signs of price stability. Vacancy rates are expected to drop below 18% [nationally] as more tenants return to the market, leverage expiring leases and prioritize hospitality-driven workplaces that support hybrid work.” Older or underperforming buildings will be targeted for renovation into residential or mixed-use properties, according to research by Agora.
The PwC report states that the sector’s recovery hinges on federal and municipality-level policy support for adaptive reuse, new capital targeting transit-accessible assets, and an industry-wide acceptance that office demand is evolving, not disappearing. “The office market has clearly turned a corner, but the path ahead won’t be linear. While vacancy rates have continued to climb, the outlook is likely to improve due to base effects: nearly empty buildings are being removed from the inventory due to obsolescence.”
One factor that may dampen the recovery, however, is Moody’s prediction that “hundreds of thousands of job losses (due to AI) in the coming months will undercut demand for space in most sectors,” the report states. “Many large office markets have too much vacant office space, causing buildings with high shares of near-term lease expiries or high vacancies or both to be unable to refinance,” the outlook stated. Among the largest U.S. office markets, Moody’s sees Chicago, Los Angeles, and Washington, D.C. as cities where demand won’t be sufficient to reduce high vacancies.
The Lending Landscape
In its 2026 Commercial Real Estate Lending Trends report, CRE investment management platform Agora reports that borrowing and refinancing activity have increased. Interest rates have fallen, providing borrowers and lenders with a more stable underwriting and transaction environment. Investor confidence has strengthened in certain markets, prompting capital to shift toward assets with durable cash flow and strong fundamentals. Following the heavy maturity wave in 2025, an estimated $936 billion in commercial mortgages will mature in 2026. This will keep lenders active while underwriting stays disciplined. However, the report cautions that economic policy remains difficult to predict. While sharp rate hikes have subsided, ongoing uncertainty around future policy and interest rates continues to complicate underwriting and long-term planning.
How to Thrive in a Challenging 2026
Deloitte concluded its report with this assessment:
“The next chapter for commercial real estate could be best suited for prepared realists. Some of the headline risks, like macro volatility, policy whiplash, and higher‑for‑longer rates, are real, but so are the openings our 2026 survey and analysis unearthed for the next 12 to 18 months: repriced, better‑structured loans; a cautiously reawakening lender pool alongside deep private credit; and selective strength in digital infrastructure, logistics, and office.”