CRE Reset 2026 Signals Market Stabilization and Growth Ahead

Macroeconomic Trends: Growth Adjusts, Risks Linger

According to a report from Colliers, economic growth cooled in 2025, with GDP slowing to 2.1% from 2.8% the year before. Consumer spending, though still strong, leveled off. Rising tariffs and stricter immigration policies pushed costs higher and made hiring harder. As a result, unemployment rose, especially in sectors like manufacturing and construction.

The Federal Reserve started cutting rates slowly in late 2025. Rates now sit near neutral, but high long-term yields and wide mortgage spreads still weigh on housing and investment.

On the positive side, early AI adoption is boosting productivity in finance, tech, and professional services. Still, these gains haven’t reached most sectors yet, and the gap is growing between large firms using AI and smaller ones that can’t.

Office: Stabilizing After Years of Change

The office sector is finding its footing. Vacancy rates are expected to drop slightly below 18% in 2026 as tenants lease space in well-located buildings. Flexible work continues to shape demand. Tenants want more inviting, hospitality-style environments. At the same time, investors are buying underperforming properties at discounts and repositioning them for new uses. Rent growth will likely stay modest, around 1%–2%.

Industrial: A New Growth Cycle Begins

After years of overbuilding, the industrial sector is entering a more balanced phase. Developers slowed new projects, and supply is aligning with demand. Vacancy should peak around 7.6% early in the year. Net absorption is projected to rise by over 35% in 2026. Key demand drivers include third-party logistics firms, manufacturers, and data centers. However, limited access to power and land in some markets may slow future growth.

Retail: Stable Demand and Limited Supply

Retail remains one of the most stable sectors. Tight new supply and steady tenant demand are keeping vacancies flat and pushing rents up slightly. Southern and Western markets like Dallas, Orlando, and Austin are likely to outperform. Retailers are focusing on experience, value, and data-driven efficiency. AI investments are shifting from experimentation to delivering measurable returns.

Multifamily: Supply Pressure Eases, Opportunities Emerge

Multifamily continues to lead in sales, but rent growth has slowed. Developers pulled back, allowing the market to catch up. With fewer projects breaking ground and job markets holding steady, occupancy should improve in 2026. Distressed deals and refinancings are beginning to surface as loan maturities spike and top-of-market underwriting gets tested — a trend seen across several asset classes during this broader market reset. Investors will focus more on operations, cost control, and retention.

Data Centers: Demand Surges, But Capacity Lags

Data centers remain red hot thanks to AI. Preleasing remains strong, and developers are racing to add capacity. Power constraints, rising costs, and community pushback are slowing projects in some areas. Even so, lease rates may rise again by year-end as supply struggles to keep up with demand.

Healthcare: Demand Grows Beyond Hospitals

Healthcare is expanding away from hospital campuses. Systems are building outpatient centers closer to patients, especially in fast-growing areas. Medical office buildings (MOBs) remain highly sought after, with average occupancy above 92%. Aging populations and rising healthcare needs will continue to drive demand in 2026. AI is also helping providers manage operations more efficiently.

Life Sciences: Slow Recovery Takes Shape

The life sciences sector is showing early signs of recovery. Vacancy remains high due to past overbuilding, but fewer new projects are in the pipeline. If company valuations improve and venture capital returns, demand could pick up later in the year. Markets with strong talent and lab space are likely to benefit first.

Hospitality: High-End and Budget Segments Lead

Upper-upscale and luxury hotels are expected to outperform in 2026 as affluent travelers continue to spend. At the same time, price-conscious travelers are boosting demand at economy and midscale hotels. Foreign tourism may stay weak due to tariffs and immigration limits. AI is changing how people plan and book travel, offering new opportunities for hotels to win guests.

Capital Markets: Investment Activity Rebounds

• Sales volume could rise 15%–20% in 2026 as more capital re-enters the market and pricing becomes more realistic.
• Pricing has stabilized, and low-to-mid single-digit gains are likely across most sectors.
• Cap rate spreads will widen as investors look more closely at local risks and returns.
• Cross-border investment is set to grow, with global buyers taking advantage of price resets.
• CMBS issuance remains high, especially for income-producing assets and large portfolios.
• Loan maturities may exceed $1 trillion in 2026. Many lenders are extending terms rather than taking back properties.

Looking Forward: Adapting in a Shifting Economy

The US CRE market is entering 2026 with cautious optimism. AI, shifting demographics, and new consumer habits are reshaping every asset class. While policy uncertainty and labor shortages remain hurdles, many sectors are stabilizing and adapting to long-term trends.

Developers, investors, and occupiers are showing more discipline. They’re focusing on fundamentals, rethinking space, and using technology to improve efficiency. The year ahead will be shaped by flexibility, strategic investment, and a continued push for productivity-led growth.