A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox.

One year ago, commercial real estate behemoth CBRE acquired Industrious, a flexible office company that opened its first space in 2013 and grew at an impressive pace in the aftermath of the pandemic. 

At the time, CBRE said in a release that Industrious’ success was “the result of an ongoing investment into understanding what makes for a great workplace, paired with continuous operational improvement.”

And it was a fair bet. In 2025, Industrious increased its global footprint by 58% from 2024, now with more than 250 units open in over 100 cities, according to the company. It is projecting 100% growth in new signings in 2026. 

Industrious currently ranks third in its sector, by number of spaces and total square footage, behind International Workplace Group (owner of Regus) and WeWork. 

The global flexible office market is poised to grow from a value of $54.59 billion in 2025 to $147.2 billion by 2033, according to SkyQuest.

While the mainstream office sector is still slowly recovering from the pandemic and the new work-from-home culture, flexible office, which encompasses coworking spaces, is benefiting from that slow recovery. Large companies want people back in the office, but they are also increasingly focused on the workplace experience for those not working at headquarters.

“I would say the biggest thing of all that’s driving it is a focus on the part of companies to try to get their midsize and smaller offices up to the quality level of their headquarters city so people don’t leave for a competitor, and they need help with that,” said Jamie Hodari, founder and CEO of Industrious. “It’s really hard for even JPMorgan or Google to run a really beautiful, engaging office experience for 43 people.”

Hodari said there are large cities with too much office space, but there are also smaller cities and regions with too little space. That plays right into the flexible office model. 

“You have all of these people who want to basically work near where they live. They want to bike to work. They want to walk to work. They want to drive five minutes to work,” said Hodari.

Of Industrious’ last 50 workspace openings, a disproportionate number are in neighborhoods, not in large central business districts. 

There is also a drive by landlords of Class B office buildings, which still have high vacancies, to refurbish their properties in order to attract new tenants. Industrious can benefit from that simply through its business model, which differs from other flexible office companies. 

Instead of renting entire buildings, Industrious acts more like a hotel management company. The company signs management agreements with landlords to run a portion of a building. Rather than paying a monthly rent to the landlord, it split the profits — and also the risk. This “asset-light” approach makes Industrious more resilient during economic downturns because it isn’t locked into massive, long-term lease payments.

Industrious specializes in a more hospitality-focused environment, building spaces that feel more like boutique hotels than traditional offices. It also attracts a more varied tenant.

“You just get a lot more people doing cool things into the building, and so we hear from landlords all the time, ‘Hey, I have this whole building, say it’s half leased, and I want to drive the rest of it. How do I make the lobby feel not like a no-man’s land?’” said Anna Squires Levine, president of Industrious.

Industrious is clearly building on better times in the office market right now, and Levine said it’s not seeing any pain from weaker employment reports. The risks to flex, however, can be outsized. 

“It’s a sector that overperforms in good times and underperforms in bad times,” said Hodari. “So you’re going to do better than long-term leasing when the going’s good, and when you hit a recession or when something like Covid happens, long-term leasing might go down by 6% or 10% and flex might go down by 25%.”

Last week, applications to refinance a home loan rose 20% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Applications were 183% higher than the same week one year ago.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, decreased to 6.16% from 6.18%, with points falling to 0.54 from 0.56, including the origination fee, for loans with a 20% down payment. That is the lowest rate since September 2024.

“Mortgage rates declined further last week, driving another big week for refinance applications, which saw the strongest level of activity since September 2025,” said Joel Kan, MBA’s vice president and deputy chief economist. “These lower rates prompted greater refinance activity from conventional and VA refinance borrowers, with increases of 29 percent and 26 percent, respectively. Refinance applications accounted for more than 60 percent of applications, and the average loan size also moved higher.”

Rates initially dropped the week before last, after President Donald Trump said he would make mortgage giants Fannie Mae and Freddie Mac buy $200 billion of mortgage-backed bonds. Rates only fell 9 basis points across the two weeks, but the focus on it in the news may have caused an outsized reaction. The 30-year fixed was 86 basis points lower year over year.

Applications for a mortgage to purchase a home rose 5% for the week and were 18% higher than the same week one year ago. Homebuyers are still contending with high home prices and continued uncertainty in the broader economy. There are more homes available for sale, but affordability, despite slightly lower rates, is still a major impediment.

Interest rates moved much higher to start this week, as bond markets sold off following the Trump’s threats of new tariffs and escalating tensions over Greenland. The average rate on the 30-year fixed jumped 14 basis points higher, according to a separate survey from Mortgage News Daily.

“This matches the level seen the day before the announcement of the administration’s $200 billion mortgage bond buying plans. The last time rates were higher was December 23rd,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “In light of that announcement, why aren’t mortgage rates doing better? Simply put, the market has already reacted to that news to the extent allowed by its transparency.”

• Commercial real estate transaction volume was 10% lower year over year, with just 1,800 deals overall, according to monthly data provided by Moody’s as a media exclusive to CNBC’s Property Play.
• Investors are leaning toward larger-scale acquisitions and bigger, higher-quality assets.
• The multifamily sector saw the majority of November deals, recording 20 transactions, followed by office with 11 and industrial with eight.

A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox.

For the second month in a row, heat came out of the commercial real estate market in November. 

Transaction volume was 10% lower than November 2024, with just 1,800 deals overall, according to monthly data provided by Moody’s as a media exclusive to CNBC’s Property Play. It tracks the top 50 commercial real estate property sales across the U.S., in core segments of multifamily, office, industrial, retail and hotel.

October was the first month of negative year-over-year transaction volume growth since the post-Fed rate hike recovery began in early 2024, but this was not just a continuation of that trend. November transactions were even lower than November 2020, the first year of the Covid pandemic. 

“This stems from the combination of higher-for-longer interest rates, policy uncertainty, a tenuous labor market, and caution on the part of CRE lenders and investors,” said Kevin Fagan, head of CRE capital market research at Moody’s. “However, market liquidity is still selectively open at two-thirds the volume of pre-pandemic, with a concentration in greater scale.”

Investors are leaning toward larger-scale acquisitions and bigger, higher-quality assets. For example, all transaction sizes dropped markedly, during the month, except those sales greater than $100 million, which were 51% higher year over year. That pushed the average deal size in November to $14.2 million, compared with an average of $12 million since the start of 2019. In addition, the majority of assets in the top 50 sales were Class A.

Sector highlights

“The trading this month is consistent with late-cycle barbelling, where there is a focus on durable trends, like demand for housing, logistics, and digital infrastructure,” said Fagan.

Multifamily saw the majority of November deals, recording 20 transactions, followed by office with 11 and industrial with eight.

Fagan noted that among the office deals, there is an “overall loosening,” and the market process for determining the true, fair price has become more efficient, faster and more reliable. 

He also said he sees a story emerging around nearly all of the office deals in the top 50, “where the offices are either purchased for mission critical facilities, because they have some specialty use, they are conversion opportunities, or they came with discounted prices.”

Office continued to see some big discount deals, like 114 West 41st St. in New York City, bought by Axonic Capital from Clarion Partners at a 53% discount to the prior sale.

Companies are also increasingly focusing on the most essential office properties. They want more control over where they operate and how much they pay for the real estate, especially given today’s discounted prices. 

Examples of that include Novartis buying a large Durham, North Carolina, campus-style facility, First Citizens buying in San Francisco, and Alo Yoga buying and occupying in Beverly Hills, California.

Medical office, which we recently reported on in this newsletter, continues to see outsized activity because of strong demand. It is not included in Moody’s core count but accounted for the top sale of November. 

A $7.2 billion medical office portfolio of 296 properties in 34 states was sold by Welltower to a joint venture of Remedy Medical Properties and Kayne Anderson Real Estate. This acquisition makes the partnership the nation’s largest owner of outpatient medical buildings, with 1,104 properties in 44 states, according to a Remedy release. 

Big portfolio deals like that were a defining feature of November’s report, accounting for 17 of the top 50 deals, which is an increasing trend in recent years as compared with pre-pandemic, according to Fagan.

Of course data centers, one of the hottest CRE sectors today, had a big November. The second-largest sale of the month, totaling $615 million, involved three industrial properties. SDC Capital Partners purchased 97 acres of land in Leesburg, Virginia, zoned for data center development.  

The National Association of Home Builders/Wells Fargo Housing Market Index fell two points in January 2026 to 37, extending a period of subdued confidence well below the 50 threshold that separates expansion from contraction. The decline reflects continued pressure from high home prices, elevated borrowing costs, and rising construction expenses, particularly in the entry-level and mid-priced segments of the market.

While demand for higher-end homes remains relatively resilient, builders say affordability challenges are increasingly constraining buyer activity elsewhere. Elevated price-to-income ratios have made down payments harder to assemble, limiting the pool of qualified buyers and dampening sales momentum.

Mortgage rates have begun to retreat, offering a potential tailwind. Freddie Mac reported the average rate on a 30-year fixed mortgage fell to 6.06% as of mid-January, the lowest level in three years and nearly a full percentage point below year-earlier levels. Still, most builder responses for the January survey were collected before the announcement that Fannie Mae and Freddie Mac would purchase $200 billion in mortgage-backed securities, a move aimed at further easing borrowing costs.

Despite the prospect of lower rates, builders continue to face significant supply-side constraints. Shortages of skilled labor and buildable lots, along with elevated regulatory burdens and material costs, are weighing on outlooks. Reflecting these pressures, the HMI component measuring expected sales over the next six months fell three points to 49, slipping below the neutral level for the first time since September.

Signs of market stress are also evident in pricing behavior. Forty percent of builders reported cutting home prices in January, unchanged from December and marking the third straight month that price reductions have reached that level or higher. The average price cut increased to 6% from 5% a month earlier. Sales incentives remained widespread, with 65% of builders offering concessions, extending a streak of more than ten months above 60%.

All major components of the index declined. The measure of current sales conditions edged down to 41, while buyer traffic fell sharply to 23, highlighting continued caution among prospective purchasers.

Regionally, sentiment remained uneven. Three-month moving averages showed confidence slipping in the Northeast and South, holding steady in the Midwest, and inching higher in the West, though all regions remained well below levels consistent with broad market strength.

The NAHB/Wells Fargo index, based on a monthly survey of single-family homebuilders conducted for more than four decades, remains a closely watched barometer of housing market conditions and future construction activity.

Domestic Investors Gain Momentum

Office and industrial properties dominated market activity in the first nine months of the year. Office deals, in particular, saw more than half of the transaction volume driven by Polish investors, reflecting a growing willingness among local buyers to seize value-add and opportunistic opportunities. Industrial investments, while lower in deal count, delivered significant transaction value, highlighting the sector’s strategic importance.

Retail assets, including retail parks and redevelopment projects, demonstrated resilience, maintaining steady liquidity. Meanwhile, Poland’s residential and student housing segments saw a handful of secondary market transactions close, with attention now turning to a record-setting acquisition of 18 Resi4Rent assets by Vantage Development.

Overall, the market’s solid performance is underpinned by strong macroeconomic fundamentals. Analysts anticipate that a return of core capital and the completion of large portfolio deals will further boost investment activity in the coming quarters.

Market Snapshot: Q1-Q3 2025

• Total investment volume: $3.02 billion ($964 million in Q3)
• Transactions: 105 vs. 87 in Q1-Q3 2024
• Volume roughly in line with $3.26 billion recorded during the same period in 2024
• Polish capital share: 23% of total volume, up from 10% in Q1-Q3 2024

Office Sector Leads with Domestic Confidence

The office market emerged as the most active sector, both in terms of transaction volume and deal count, with total investments of $1.05 billion across 36 deals. The largest office transaction involved Mennica Polska’s acquisition of a 50% stake in Mennica Legacy Tower, the only office deal exceeding $116.5 million. Other notable acquisitions included prime Warsaw office properties such as Vibe, Plac Zamkowy – Business with Heritage, Wronia 31, and High 5ive I & II in Kraków.

Average deal size hovered slightly above $29 million, highlighting the predominance of value-add and opportunistic strategies. Domestic investors accounted for 51% of office transaction volume, including several owner-occupier deals, reflecting growing local confidence. Core capital, meanwhile, remained subdued, completing just five office transactions through September.

“Core investors continue to exercise caution amid economic and geopolitical uncertainties, while opportunistic and value-add buyers selectively pursue opportunities,” said Marcin Purgal, Senior Director of Investment at Avison Young. “Polish capital is increasingly active, driving over half of office volume and deals.”

Industrial Market: High Value, Limited Transactions

Industrial properties accounted for $1.02 billion, roughly one-third of total investment volume, despite a modest number of deals. Sale-and-leaseback transactions represented 44% of sector volume, including the landmark purchase of two Eko-Okna properties by Realty Income–the largest sale-and-leaseback transaction ever in Central and Eastern Europe.

Investment activity extended beyond Poland’s primary hubs, with 17% of volume concentrated in emerging regions like Bydgoszcz and Rzeszów, and 16% in smaller centers including Olsztyn and Opole. Analysts note that moderate liquidity persists as investors navigate the balance between buyer expectations and seller pricing.

“Sale-and-leaseback deals offer stable, long-term income streams while limiting operational exposure,” said Bartłomiej Krzyżak, Senior Director of Investment at Avison Young. “However, careful due diligence remains essential to mitigate re-leasing and tenant risks.”

Retail Sector: Retail Parks and Redevelopment Drive Interest

The retail sector recorded $528 million in investment volume through September, with retail parks and convenience-focused assets dominating transactions. Two-thirds of all retail deals, representing 56% of sector volume, involved retail parks, grocery stores, or convenience schemes, while redevelopment projects accounted for 20%, mainly targeting shopping centers and stand-alone retail warehouses for conversion to residential use.

Regional shopping centers also attracted interest, with six centers sold across four transactions. Notably, Czech investor My Park acquired a 10-asset A Centrum convenience portfolio, exemplifying the sector’s appeal to first-time and cross-border investors.

“Retail parks provide an accessible entry point into the Polish market, offering stable income and attractive locations in growing regional cities,” said Artur Czuba, Director of Investment at Avison Young.

Market Outlook

Poland’s investment market benefits from solid economic growth, improving lending conditions, and increasingly attractive pricing. Analysts expect continued activity from domestic and mid-cap investors across all asset classes, while a return of core capital could drive prime, large-scale transactions in the coming months.

With interest rates anticipated to decline, buyers are positioned to capture favorable yields before property valuations adjust. Smaller real estate formats with long WAULTs are likely to remain attractive, while Polish investors continue to expand their footprint across office, industrial, retail, and residential markets.

Outstanding commercial and multifamily mortgage debt rose by $53.4 billion in the quarter, a 1.1% increase, lifting the total to $4.93 trillion, according to the Mortgage Bankers Association’s latest quarterly survey. The gains were driven overwhelmingly by multifamily lending, which accounted for more than three-quarters of the increase.

Multifamily mortgage debt climbed $40.3 billion, or 1.8%, to $2.24 trillion by the end of September. Apartment loans now represent roughly 22.5% of all outstanding commercial real estate mortgage debt in the U.S., reflecting the sector’s continued appeal to lenders seeking stable cash flows amid volatility in office and other property types.

Government-backed and agency-linked capital once again dominated the market. Portfolios and mortgage-backed securities issued or guaranteed by federal agencies and government-sponsored enterprises posted the largest increase in holdings, rising $27.8 billion during the quarter. Banks and life insurance companies also expanded their exposure, while securitized vehicles such as commercial mortgage-backed securities showed more muted growth.

Commercial banks remain the largest holders of commercial and multifamily mortgages overall, with roughly $1.8 trillion on their balance sheets, representing about 37% of the market. Agency and GSE portfolios and mortgage-backed securities follow with approximately $1.11 trillion, or 23%. Life insurance companies hold about $783 billion, while CMBS, collateralized debt obligations and other asset-backed securities account for roughly $642 billion.

Within the multifamily segment specifically, agency and GSE portfolios and mortgage-backed securities control about half of all outstanding debt, totaling roughly $1.11 trillion. Banks and thrifts hold close to $651 billion, while life insurers account for about $263 billion. Smaller shares are held by state and local governments and by securitized vehicles.

Quarterly growth patterns reinforced the sector’s reliance on public and quasi-public capital. Agency and GSE portfolios recorded the fastest growth in percentage terms, expanding holdings by 2.6% in the third quarter. Banks increased their commercial and multifamily mortgage exposure by just under 1%, while life insurers posted gains of about 1.6%. By contrast, real estate investment trusts trimmed their holdings, marking the sharpest decline among major investor groups.

The same dynamic played out in multifamily lending alone. Agencies and GSEs captured the largest dollar increase in apartment debt holdings, followed by banks and life insurers. Outside traditional lenders, nonfinancial corporate borrowers recorded the fastest percentage growth in multifamily mortgage holdings, while state and local government retirement funds reduced exposure modestly.

On an annual basis, total commercial mortgage debt is up about 4% from a year earlier, while multifamily balances have grown nearly 6%, highlighting how apartment finance continues to outpace the broader commercial property market as the industry navigates higher interest rates and uneven demand across property sectors.

• 
  Americans are increasingly moving to smaller markets rather than urban cores as they seek cheaper housing and better quality of life.
• Oregon was the most popular moving destination for the first time ever in 2025, while Florida and Texas are seeing more balanced migration, according to an annual migration report from United Van Lines.
• The commercial real estate market will also have to shift to adapt to those changes, experts said.

A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox.

Historically, Americans moved in order to find better economic opportunities. But the driver has now shifted from the “Go West, young man” mentality, where free and open land presented that opportunity, to much more personal incentives of family and affordability, according to an annual migration report from United Van Lines. 

It found Americans are not only choosing to live closer to family, but that they want smaller markets rather than urban cores as they seek cheaper housing and better quality of life. This shift will have a significant impact on commercial real estate investors and the choices they make going forward.  

Oregon was the most popular moving destination for the first time ever in 2025, while Florida and Texas, which had seen huge influxes in the Covid and early post-Covid years, are now seeing more balanced migration. 

Six of the top 10 inbound states were in the South and South Atlantic: West Virginia, South Carolina, North Carolina, Arkansas, Alabama and Delaware.

“The data reveals Americans are seeking a different pace of life, and destinations like Oregon, the Carolinas and the south are delivering it,” Eily Cummings, vice president of corporate communications at United Van Lines, said in a release. “While our total number of residential moves is similar to 2024, we’re seeing much greater complexity in why people move and increasingly divergent migration patterns across age groups.”

Younger millennials and Gen Z are favoring New Jersey, meanwhile, since it’s more affordable than New York City. But retirees are moving out of the state, making it the top state for outbound migration, according to the report.

As the migration rationale shifts to basic affordability and easier lifestyle, the commercial real estate needed to support that is probably somewhat different than if the main driver of those migration patterns was more robust economic opportunity, according to Ryan Severino, chief economist at BGO, a global real estate investment, lending and services firm.

He said the need for more affordable housing, more modest office parks and more middle- to lower-income retail spaces are better bets for investors. Even the industrial real estate that supports that factors in. For example, if people are living in smaller workforce housing, they need to have self-storage nearby. 

Demographic shifts also play into that thesis. Population growth is slowing down, the household formation rate is slowing down and the migration rate is slowing down over time, according to the U.S. Census Bureau. 

“I think what it suggests to me, especially working for a private equity investor, is that we do need to be smarter and pick our spots more carefully from a commercial real estate perspective going forward, than I think a lot of the last however many decades where people have operated under this blanket assumption that, oh, you know, these migration patterns are durable and they’re accelerating over time, when the reverse is probably true,” Severino said.

Southern swing

While Americans are still heading to southern regions for lifestyle and affordability, migration patterns now appear to be more volatile and less durable than they have been in the past and will not necessarily accelerate. 

There was a huge migration to Southern states in the first years of the pandemic, and multifamily developers expected that to be a gold mine for many years to come. 

“They would buy things thinking we’re going to get 6% and 8% rent growth for as far as the eye can see, and we’re going to be minting money and, in five years, we’re going to double what we paid for this thing,” said Manus Clancy, head of data strategy at Lightbox, a commercial real estate data and analytics platform.

Rents, however, are now coming down, as oversupply makes its way through the system, and some who fled to the South are now moving out.

“The truth is that people were coming down to save money, that while the migration was real, it wasn’t absent other factors, like new development, new inventory coming on. The new inventory in 2024 was the highest in 50 years. And I think that there was an enormous amount of buyers’ remorse,” he said.

Arizona, Nevada and Florida are prime examples of where companies relocated and people moved for a so-called “better quality of life” but are now leaving.

“It was not anything approximating what I know to be real life. And I think a lot of investors and developers took that as more of a longer-term structural change, an acceleration in these longer-term patterns,” Severino said. “And so they went out and they built a bunch of housing in Florida and Nevada and Arizona and places like that, and then a lot of those people didn’t stick around.”

While snowbirds will still migrate to the South, commercial real estate investors need to be more strategic in where they’re putting their money, according to Clancy, especially in retail. 

“Guys like Simon [Simon Property Group] will do the high end, and they are … but they’re being very, very selective. Nobody’s going out there saying, ‘We’re going to build a strip mall on spec, because we expect a million people from Illinois, Michigan and Indiana to come down here in the next five years.’ It’s just not happening,” he said.

Clancy said he expects to see more retail geared toward discount grocers and stores such as Walmart. 

Moving data does show that while there is a new push by young Americans to smaller, more affordable Midwestern markets, older generations will generally choose to retire in the South, but not nearly as much as they have in the past. 

“Even if the population is getting bigger, the rates of all of these things are slowing down, which means it’s probably not the layup that a lot of people who even passively pay attention to commercial real estate perceive it to be,” Severino said. 

A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox.

The 2025 economy wasn’t as robust as anticipated — and that’s shaping the commercial real estate outlook for 2026. The economy has slowed down, unemployment is up and construction has taken a bit of a breather across most sectors. 

This year saw increases in both tariffs and immigration restrictions. Together, those have raised costs for builders and developers. But interest rates have also come down, which is starting to unlock more capital, albeit slowly and cautiously. 

Here’s what you can expect for the year ahead. 

General investment

The many and varied outlook reports from just about every commercial real estate firm out there, as well as related consulting and financial services firms, use words like “new equilibrium” (Colliers), “firmer fundamentals” (Cushman & Wakefield), “ongoing recovery” (KBW) and “signs of price stability” (CoStar).

Looking at specifics for the year ahead, CRE leaders are slightly less optimistic than they were ahead of 2025, according to a Deloitte survey of 850 global chief executives and their direct reports at major real estate owner and investor organizations across 13 countries. Eighty-three percent of respondents said they expect their revenues to improve by the end of 2026 compared with 88% last year. Fewer respondents said they plan to increase spending, while more expect to keep spending flat. Still, 68% said they anticipate higher expenses in 2026.

Most respondents said they do expect the cost of capital to improve, and growth is expected across most asset classes. Overall sentiment is down from last year but well above that of 2023, according to the Deloitte survey.

Looking specifically at the U.S., the commercial real estate sector is entering 2026 with renewed momentum, clearer visibility, and growing optimism across both leasing and the capital markets landscape, according to a forecast from Cushman & Wakefield. It notes that despite uncertainty surrounding tariffs, a volatile policy backdrop, tightening immigration and episodes of financial market stress this year, the economy was more resilient than expected, driven in large part by artificial intelligence. 

“As we head into 2026, the tone has shifted meaningfully,” said Kevin Thorpe, chief economist at Cushman & Wakefield. “There is still risk on both sides of the outlook, but we’ve moved past the peak levels of uncertainty, and confidence in the CRE sector is building. Capital is flowing again, interest rates are moving lower, and leasing fundamentals are generally stabilizing or improving. If 2025 was a test of resilience, 2026 has real potential to reward it.” 

Capital is reengaging, according to Colliers, which predicts the industry is, “entering a new equilibrium.” Forecasters there point to the bottoming out of office demand and new growth in industrial, thanks, again, to AI.  

PwC also emphasizes that capital began flowing again in the second half of this year, “but selectively.”

“The deal environment rewards those who can combine data-driven insight with strategic conviction. For clients, the challenge—and the opportunity—is to navigate a landscape where liquidity, technology, and consolidation are redefining the meaning of value creation in real assets,” according to a PwC report.

The share of investors who say they expect to increase their commercial real estate investments over the next six months fell in the fourth quarter of this year from the previous quarter in every sector except retail, according to a survey from John Burns Research and Consulting. Multifamily investor sentiment weakened for the fourth consecutive quarter.

“Investors cited headwinds that included elevated interest rates, economic uncertainty, and local regulatory burdens. 49% of investors expect to hold their CRE exposure at the current level over the next 6 months, in line with the past two quarters,” according to the report.

Capital markets

“Capital Markets Reawakening” – that’s the headline from Colliers, which says pricing has found a floor and deal velocity is rising. Colliers forecasts a 15% to 20% increase in sales volume in 2026 as institutional and cross-border capital reenters the market.

Capitalization rates seem to be ready to move lower next year, according to a forecast from CoStar. Its data is already showing hints of this in the multifamily and industrial sectors, where vacancies have peaked and rent growth is picking up.

CoStar also notes deal activity is picking up, with third-quarter sales volume up more than 40% year over year, and banks are “easing back into commercial real estate lending,” according to the report. 

Bond markets are following suit, showing new appetite for risk. CoStar points to the narrowing spread between government and corporate bond yields to roughly 1 percentage point (well below the historical average), “typically a precursor to greater real estate investment and firming prices.”

This tracks with the Cushman & Wakefield outlook, which also notes that in 2025 debt costs eased, lenders reentered the market and institutional capital returned, “supporting a broad-based revival in deal activity.” 

Lending was up 35% year over year, institutional sales activity increased 17% through October, and pricing has “largely reset, presenting the market with compelling opportunities for yield and income generation,” Cushman & Wakefield found. 

Specific sectors

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% as more tenants return to the market, leverage expiring leases and prioritize hospitality-driven workplaces that support hybrid work, according to Colliers.

There will continue to be a flight to quality in office, as Class A buildings in many markets are now nearly fully occupied. Office construction is also at its lowest level in more than three decades, according to Yardi.

Cushman & Wakefield forecasts continued growth in San Francisco; San Jose, California; Austin, Texas; New York; Atlanta; Dallas; and Nashville, Tennessee, which posted strong positive absorption in 2025, supported by AI expansion and diversified job growth.

“For large office users looking to secure high-quality space, the message is clear: if you find the right space, act decisively,” said James Bohnaker, principal economist at Cushman & Wakefield. “There is strong demand for new, high-quality space and not enough of it to go around. And given the limited construction pipeline, it’s going to get even tighter.”

Industrial has also seen a huge drop in construction, down 63% since 2022, according to the Colliers report. Vacancy is peaking and net absorption is set to jump to 220 million square feet, as reshoring, manufacturing and data centers fuel demand.

Retail is already undergoing a major shift in how and where companies are leasing space, according to Brandon Svec, national director of U.S. retail analytics at CoStar. 

He points to nearly 26 million square feet of ground floor retail leased in nontraditional properties in the first three quarters of 2025, including multifamily, student housing, hospitality and office. 

Retailers are embracing smaller footprints, with the average retail lease signed over the past four quarters falling below 3,500 square feet for the first time since CoStar began tracking this in 2016. This is being driven largely by restaurant and service operators such as Starbucks, Chipotle, Chick-fil-A, Jersey Mike’s, Dunkin’ and McDonald’s, according to Svec, who noted the growing appeal of walkable, mixed-use retail environments over traditional big-box formats. He does have a warning though.

“Significant uncertainty remains around the impact of tariffs on an already fragile consumer. While suppliers and retailers have largely absorbed these costs to date, many have signaled that price increases are imminent. With consumers already showing some signs of spending fatigue, tariff-related price hikes could further strain household budgets and dampen discretionary spending,” Svec wrote in a report. 

Multifamily rents are starting to ease, as a record level of new supply continues to make it through the pipeline. 

“Multifamily has led investment sales volume since 2015, and there are no signs of this changing. However, its share of total volume is expected to ease somewhat as investors allocate more capital to office, data centers, and retail,” according to the Colliers report.

Data centers have been the darling of 2025, with demand significantly outpacing supply. Deloitte called the sector, “a clear bright spot in the U.S. commercial real estate landscape.” It pointed to nine major global markets where 100% of the new construction pipeline is already fully pre-leased. 

Data centers do, however, face headwinds in financing, grid capacity, zoning and local politics. 

“Friction is building as communities push back on data center development. A few projects have already been abandoned, and more are expected to be shelved in 2026,” according to the Colliers forecast.

REITs

Public-to-private REIT transactions and portfolio mergers are likely to dominate in the year ahead as listed valuations lag private market pricing, according to a report from PwC. That will be driven by considerations of scale, governance credibility and cost of capital. 

“Expect accelerated M&A as capital concentrates, AI exposes inefficiencies, and platforms converge—real assets are entering a new phase defined by intelligence, integration, and scale-driven opportunity,” wrote Tim Bodner, global real estate deals leader at PwC.

As for the real estate investment trust stocks, they were the real laggards of 2025, but could be poised to outperform in 2026, according to a forecast from Nareit, the REIT industry association. It points to a divergence between stock market valuations and REIT valuations and an ongoing divergence between public and private real estate valuations. 

“These will close, and one or both could happen in 2026. If they do, we expect REITs to outperform based on our own historical analysis and their ongoing strong operational performance and balance sheets,” the report said. 

Existing single-family home transactions rose 5.3% year-over-year to 754, underscoring the sector’s durability. The median price climbed 3.3% to $671,250, marking one of the nation’s most sustained appreciation runs–Miami single-family prices have advanced in 167 of the past 168 months, driving a near-145% cumulative gain since 2015.

In contrast, the condominium market exhibited further softening. Existing condo sales slipped 3.8% annually to 764 units, with the median price declining 9.5% to $395,000. Despite the pullback, Miami condo values have nearly doubled over the decade, remaining up or flat in 162 of the last 174 months.

Total residential sales volume strengthened overall, with dollar volume surging 8.5% year-over-year to $1.4 billion. Single-family homes contributed $861 million–up 10%–while condo volume rose 6.4% to $581 million.

The market’s long-term boom has generated substantial wealth for homeowners. Properties acquired in Q4 2009 and sold in Q4 2024 yielded average equity gains of $555,900 for single-family homes, almost double the national average of $306,600, per Miami Realtors research. Condo owners saw $342,600 in gains, versus $252,000 nationwide.

This appreciation has accentuated the wealth gap between owners and renters. Homeowners’ average wealth rose $140,900 over the past five years, according to the National Association of Realtors. NAR estimates, drawing on Federal Reserve data, project median homeowner net worth at $430,000 in 2025, compared with just $10,000 for renters.

Inventory levels pointed to a gradual shift toward balance. Active listings increased 13.5% year-over-year to 18,287, though still 16.7% below November 2019 pre-pandemic figures. New listings have moderated, and inventory accumulation has decelerated from earlier peaks.

Single-family listings grew nearly 16% to 5,554 units, equating to a 6.5-month supply–a level typically viewed as market equilibrium. Condo inventory advanced 12.5% to 12,733 but stood over 17% below pre-pandemic norms, with a 14.1-month supply signaling a clear buyer advantage.

Nationally, unsold inventory totaled 1.43 million units in November, up 7.5% annually and representing a 4.2-month supply, NAR reported.

Seller concessions have edged higher, with single-family homes fetching a median 94% of original list price and condos 93%. Days on market lengthened, with median listing-to-contract times reaching 46 days for single-family homes and 72 days for condos; full closing times extended to 83 days and 111 days, respectively.

Distressed transactions stayed minimal at 2.4% of closings, down sharply from 70% at the 2009 trough. Short sales comprised 0.3% and REOs 2.0%, aligning with U.S. norms.

Cash deals maintained their dominant role, accounting for 36.8% of November closings–far exceeding the national ~27% average. Nearly half of condo sales were all-cash, verses about one-quarter for single-family homes.

Rising supply and extended marketing times are enhancing buyer leverage, while sellers benefit from Miami’s exceptional long-term price trajectory–one of the strongest nationwide.

Global hotel performance remained largely stagnant over the past year, with modest pricing gains offset by declining occupancy. Year-to-date revenue per available room (RevPAR) rose 0.2% through August 2025, according to STR, as a 1.0% increase in average daily rate was outweighed by a 0.8% drop in occupancy.

According to PwC, structural forces are increasingly shaping the sector’s outlook. Artificial intelligence adoption is accelerating across pricing, marketing, and operations, enabling more granular personalization, dynamic revenue management, and cost efficiencies. AI is also emerging as a new demand-generation channel as travelers increasingly turn to AI platforms for trip planning and hotel recommendations, reducing reliance on traditional search and online travel agencies.

Performance bifurcation across chain scales has widened. Luxury hotels posted 5.3% RevPAR growth year-to-date through August, while the economy segment declined 1.8%. Luxury and upper-upscale properties were the only segments to record positive growth, driven by pricing power and resilient demand from higher-income travelers. Softer consumer sentiment and increased competition from short-term rentals continue to pressure lower-priced segments.

Premiumization remains the industry’s primary growth driver. Luxury operators are capturing demand through higher rates, experiential offerings, and elevated service expectations, reinforcing the segment’s resilience amid broader economic uncertainty.

International travel remains a headwind. The World Travel & Tourism Council projects a $12.5 billion decline in U.S. international visitor spending in 2025, while Tourism Economics forecasts an 8.2% drop in arrivals. Canadian visitation has fallen sharply, down 23.7% year-to-date through June, amid policy and trade tensions.

PwC’s outlook for 2026 is more constructive. Stabilizing geopolitical conditions and the FIFA World Cup, hosted in the U.S., are expected to support a rebound in inbound travel and provide a potential inflection point for hotel demand.