2026 Commercial Real Estate Outlook: What’s Ahead for the Market?

Based on insights from Lawrence Yun, Chief Economist, National Association of REALTORS®

As 2026 approaches, commercial real estate professionals — brokers, landlords, investors, lenders, developers, and business owners — are all asking the same question: What does next year look like?

Fortunately, we have a strong roadmap thanks to the latest outlook presented by Lawrence Yun, Chief Economist for the National Association of REALTORS®, during the 2025 NAR NXT Commercial Forum. His slide deck gives us a clear, data-informed sense of where the economy and the major CRE sectors may be headed.

Below is a breakdown of the big takeaways — and what they might mean for the commercial market in 2026.

Source Credit: Insights are based on the 2025 NXT Commercial Forum — Real Estate and Economic Outlook by Lawrence Yun, National Association of REALTORS®.
Full presentation PDF: https://cms.nar.realtor/sites/default/files/2025-11/2025-nxt-commercial-forum-real-estate-and-economic-outlook-lawrence-yun-presentations-slides-11-15-2025.pdf

A Stable Economy Sets the Groundwork

One of the biggest themes from Yun’s outlook is economic stability. While the rapid rises and dips of the early 2020s are behind us, the U.S. economy is expected to move forward at a steady pace:

• Job growth remains consistent
• Consumer spending is holding
• Inflation is moderating
• Interest rates may gradually ease

Even a modest drop in interest rates can have a meaningful impact on commercial real estate — unlocking refinancing opportunities, reviving acquisitions, and giving developers more confidence in new projects. While no one is expecting the ultra-low rates of the 2010s, the market may find some breathing room in 2026.

Demand Is Still Strong — Just More Selective

Demand for commercial properties isn’t fading; it’s simply evolving.

Businesses are still expanding, relocating, resizing, or reconfiguring their footprints. The difference is that decisions are more thoughtful, and companies want flexibility more than ever.

This environment rewards landlords and investors who embrace adaptability, whether through mixed-use concepts, creative office strategies, or upgrades that make older buildings more attractive.

Construction & Supply: A More Disciplined Pipeline

Developers nationwide are being more disciplined — which is actually a positive sign for the overall health of the market.

For 2026, expect:

• Steady but careful construction starts
• Fewer speculative builds
• More tailored, demand-driven development
• Market balance in most regions and property types

This helps stabilize rents and reduces the risk of oversupply. Unlike past cycles marked by aggressive construction booms, 2026 looks poised to be a year of measured development.

2026 Outlook by Property Type

Let’s break down how the major commercial property sectors are expected to perform.

🏢 Office: Stabilizing, But Still Transforming

The office sector continues to be one of the most dynamic — and challenging — areas of commercial real estate. But there’s good news: the market appears to be finding its footing.

Key Trends for 2026

• Companies are settling into long-term post-pandemic workplace strategies.
• Hybrid models remain dominant, but office is still necessary for collaboration, culture, and client-facing roles.
• High-quality and well-located buildings continue to outperform lower-tier properties.

Class A office in strong markets remains resilient, while Class B and C buildings without reinvestment will continue to struggle.

Opportunity Areas

• Adaptive reuse (office-to-residential or office-to-mixed-use) continues gaining traction.
• Suburban office in live-work-play environments is holding demand better than expected.
• Smaller footprints with premium amenities are increasingly popular among tenants.

The bottom line:
2026 is a year of stabilization and strategic repositioning for office assets.

🏭 Industrial & Logistics: Still the Market Leader

Industrial remains the strongest commercial property sector — and 2026 looks like more of the same.

Key Drivers

• E-commerce demand is stable
• Supply chains have normalized
• Last-mile distribution continues expanding
• Manufacturing reshoring brings new demand to certain regions

Vacancy rates may tick up slightly from their record lows, but the sector remains fundamentally healthy.

What to Watch

• Rising construction costs may limit speculative building
• Markets with major transportation hubs will continue to outperform
• Small-bay industrial is increasingly in demand from both service providers and e-commerce operators

For investors and developers, industrial continues to offer one of the clearest paths to stable returns.

🏬 Retail: A Surprisingly Strong Performer

Retail has quietly emerged as one of the most stable sectors — especially neighborhood retail, service-based retail, and essential business clusters.

2026 Retail Themes

• Experiential retail continues growing
• Restaurants remain strong (despite rising costs)
• Medical retail and wellness tenants are expanding
• Second-generation retail space is in demand due to lower buildout costs

Consumers have returned to in-person shopping for convenience, service, food, and social experience — benefits that online shopping can’t replace.

Bright Spots

• Neighborhood centers in high-traffic corridors
• Grocery-anchored shopping centers
• Retail outparcels
• Mixed-use spaces with foot traffic

Retail in 2026 isn’t defined by the old “death of brick-and-mortar” narrative. It’s defined by reinvention and resilience.

🏘️ Multifamily: Strong Demand, Rising Caution

Multifamily remains one of the most in-demand asset classes in the country, but it’s not without challenges.

In 2026, expect:

• Strong renter demand due to affordability pressures
• More concessions in oversupplied Sun Belt markets
• Stabilization in Midwest and Northeast markets
• Ongoing demand for Class B and workforce housing

New deliveries in some markets may temporarily soften rents, but long-term fundamentals remain strong.

Investment Opportunities

• Rehab-to-rent strategies
• Workforce housing
• Class B/C repositioning
• Markets with job and population growth

Overall, multifamily remains a solid performer heading into 2026.

🏨 Hospitality: Continued Recovery and Expansion

Hotels and hospitality properties are continuing their post-pandemic rebound, driven by:

• Strong leisure travel
• Returning business travel
• Steady tourism numbers
• Event and conference bookings

Luxury resorts and boutique hotels are outperforming the broader market, while budget hotels benefit from families and cost-conscious travelers.

In 2026, hospitality looks set for another year of steady, healthy growth.

What This Means for CRE Professionals in 2026

For brokers, developers, owners, and investors, the 2026 commercial landscape offers both stability and opportunity.

A few strategic takeaways:

1. Prioritize quality and adaptability

Flexible spaces and well-located assets will outperform.

2. Watch the capital markets closely

Even a small interest rate drop could open the floodgates for refinancing, acquisitions, and development.

3. Focus on relationship-based brokerage

Tenants and investors are weighing decisions more carefully — personal guidance matters more now.

4. Position yourself around emerging niches

Life sciences, adaptive reuse, neighborhood retail, boutique industrial, and medical office are strong candidates.

5. Be prepared for increased deal volume

Stability breeds movement. Many clients have been waiting for clarity — 2026 may be the year they act.

Final Thoughts

The overall tone of the 2026 commercial real estate outlook can be summed up in two words:
Cautious optimism.

We’re looking at a stable economy, disciplined construction, and healthy demand across most sectors. There’s still plenty of uncertainty — interest rates, global events, and local market conditions all play a role — but the fundamentals are solid.

For commercial real estate professionals, 2026 isn’t a year to sit back.
It’s a year to lean in, stay informed, and seize opportunities as they emerge.