Commercial Real Estate Outlook 2026: Higher Expenses and Sector Shifts

Commercial Real Estate Sentiment for 2026

• 📊 Commercial real estate leaders are slightly less optimistic about 2026 compared to 2025, according to a Deloitte survey.
• 📈 While 83% expect revenues to improve by the end of 2026 (down from 88% last year), 68% anticipate higher expenses overall.
• ⚠️ Sentiment is down from last year but remains significantly above 2023 levels.

Office Sector Recovery

• 🏢 The office sector is showing signs of bottoming out, with vacancy rates expected to drop below 18% as tenants return.
• 🔑 There's a continued flight to quality, leading to near full occupancy in Class A buildings in many markets.
• 🏗️ Office construction is at its lowest level in over three decades.

Multifamily and Investment Shifts

• 🏘️ Rents in the multifamily sector are starting to ease due to a record level of new supply entering the market.
• 💰 Multifamily has dominated investment sales volume since 2015, but its share is expected to ease as capital shifts to other sectors.
• 📊 Investors are allocating more capital towards sectors like office, data centers, and retail.

Data Centers: A Bright Spot with Headwinds

• 💡 Data centers are identified as a clear bright spot in the US commercial real estate landscape, with demand significantly outpacing supply.
• 🚀 Nine major global markets have 100% of their new construction pipeline already pre-leased.
• ⚠️ Challenges for data centers include financing, grid capacity, zoning, and local politics.

Prop Tech and AI Integration

• 💻 Property technology (Prop Tech) is experiencing a surge in interest and development, with AI playing a crucial role.
• 🤖 AI is increasingly informing investors and influencing operations across all types of commercial real estate, including data centers and operations facilities.
• ⚡ The capital flowing into real estate is becoming reliant on AI for decision-making and operational insights.