Cushman & Wakefield Forecasts U.S. CRE Market Shift “From Resilience to Optimism” in 2026

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Key Terms

commercial real estate (CRE) financial

Commercial real estate (CRE) consists of properties used for business purposes, such as office buildings, retail stores, warehouses, and hotels. It matters to investors because these properties can generate rental income and may appreciate in value over time, providing opportunities for profit and portfolio diversification. CRE plays a key role in the economy by housing businesses and supporting commerce.

capital markets financial

Capital markets are places where people and organizations buy and sell long-term investments like stocks and bonds. They help connect those who need money to grow or fund projects with investors looking to earn returns over time. For investors, capital markets are important because they offer opportunities to invest, save, and grow their wealth through a variety of financial assets.

absorption technical

Absorption occurs when a company takes in or incorporates a new asset, such as another business or a significant investment, into its existing operations. For investors, understanding absorption helps gauge how well a company can manage growth or integrate acquisitions, which can impact its overall stability and future performance. It’s like adding new pieces to a puzzle and seeing how smoothly they fit together.

flight to quality technical

A "flight to quality" occurs when investors move their money from riskier investments to safer ones, such as government bonds or stable stocks, usually during times of economic uncertainty or market volatility. This shift is like choosing a sturdy, reliable bridge over a shaky one when crossing a rough river—investors prioritize safety to protect their assets. It matters because it can signal increased investor concern and often leads to changes in market prices and stability.

Class A buildings technical

Class A buildings are high-quality commercial properties that are well-located, modern, and maintained to high standards. They typically attract tenants who are reliable and financially strong, making these buildings more desirable. For investors, Class A properties often offer steady income and potential for value appreciation due to their prime features and location.

construction pipeline technical

A construction pipeline is a plan or schedule of building projects that are currently underway or planned for the future. It shows the ongoing and upcoming developments in a particular area or industry, much like a list of upcoming events. For investors, understanding the construction pipeline helps gauge future growth and development, indicating potential opportunities or risks in the market.

multifamily absorption technical

Multifamily absorption is the rate at which newly available apartment units are rented or sold over a specific period. It indicates how quickly demand for rental housing is growing in a market. For investors, higher absorption suggests strong interest and healthier rental markets, which can lead to increased property values and rental income opportunities.

mark-to-market rent financial

Mark-to-market rent is a method of updating the value of rental income to reflect current market rates. It ensures that the rent a property earns aligns with what similar spaces are being leased for today, rather than relying on outdated agreements. For investors, this helps provide a more accurate picture of a property's ongoing income potential and overall value.

12/04/2025 - 02:30 PM

2026 Outlook points to clearer visibility, firmer fundamentals, and broader market opportunities.

NEW YORK--(BUSINESS WIRE)-- Cushman & Wakefield (NYSE: CWK) today released its U.S. Outlook 2026, revealing that after a year defined by extraordinary macroeconomic uncertainty, the U.S. commercial real estate (CRE) sector is entering 2026 with renewed momentum, clearer visibility and growing optimism across both leasing and the capital markets landscape.

Despite uncertain tariffs, a volatile policy backdrop, tightening immigration flows and episodes of financial market stress in 2025, the U.S. economy proved far more resilient than expected. Real GDP growth is projected at 1.9% in 2025 and 1.7% in 2026, buoyed heavily by the acceleration of AI-driven investment, which accounted for more than half of all GDP growth in 2025.

“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.”

Clear Tailwinds for Capital Markets

After two years of constrained liquidity, 2025 marked a turning point. Debt costs eased, lenders re-entered the market, and institutional capital returned, supporting a broad-based revival in deal activity.

Debt availability and pricing improved sharply, with lending volume up 35% year-over-year.
Institutional sales activity increased 17% year-to-date through October.
Pricing has largely reset, presenting the market with compelling opportunities for yield and income generation.

Investors are also seeing more motivated sellers, both from portfolio recalibration and selective distress, creating attractive entry points.

“Commercial real estate has already gone through a major price correction, and we are just now emerging from it,” said James Bohnaker, Principal Economist at Cushman & Wakefield. “The sector is not overbuilding heading into next year, and if anything, we are underbuilding in certain areas, which will help support the fundamentals under most economic scenarios. CRE is now fairly priced, and that will likely attract even more capital as investors rebalance their portfolios and expand exposure to real estate.”

Leasing Markets: Quality Space is Tightening

Across major U.S. markets, elevated amounts of vacant space in office and some industrial markets presents tenants with leverage to negotiate favorable lease terms. However, the window to capitalize on market dislocation may be closing. Occupiers are making more decisive commitments and prioritizing high-quality, well-located space, and with limited new supply expected in the next few years, premiums for quality space are expected to rise. The same is true in retail, where the market has been consistently undersupplied amid diverse tenant expansion post-pandemic.

Office: Flight to Quality Accelerates

Class A buildings in many markets are nearly fully occupied, driven by tenant preference for modern, amenitized environments.
The U.S. office construction pipeline is at its lowest level since the 1990s, with just 20 million sq. ft. expected to deliver between 2026–2028.
Key markets, including San Francisco, San Jose, Austin, New York, Atlanta, Dallas, and Nashville, 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 Bohnaker. “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: Demand Rebounds as Tariff Uncertainty Moderates

Industrial leasing regained strength in late 2025, with the strongest quarterly absorption in over a year.

Demand forecasts for 2026–27 have been revised 70 million sq. ft. higher than midyear estimates.
New supply will fall sharply, expected at roughly half the pace of 2022–25.
Competition for land is intensifying as data center developers and industrial users target similar power-rich sites.

Market-level performance varies widely. Coastal port markets face cost pressure and softening rents, while inland hubs such as Dallas, Chicago, Phoenix, Atlanta, and Reno continue to record rent growth and robust occupier interest.

Multifamily: Structural Strength Continues

Multifamily absorption remains near record highs, propelled by:

High mortgage rates and low for-sale inventory
Demographics favoring renter household formation
A collapse in new construction starts, down two-thirds from peak
Rent growth is forecasted to strengthen to 5% by 2027, as new supply dries up.

Retail: Stable, with Opportunities in Grocery-Anchored and High-Quality Malls

Retail fundamentals remain steady, with occupancy near long-time highs and construction muted. Even with flat-to-negative headline absorption in 2025 due to big-box bankruptcies, leasing velocity, mark-to-market rent gains, and mall-sector performance have all improved.

A Market Turning the Page

Cushman & Wakefield’s baseline scenario, with a 50% probability, foresees continued economic expansion, gradually easing inflation, and a more supportive policy environment as tariff-related adjustments stabilize and the Fed lowers interest rates toward a neutral 3% by late 2026.

“With better visibility, capital confidence returning, and supply waves receding across several key asset types, the backdrop for commercial real estate in 2026 is the strongest it has been in years,” said Thorpe. “The path ahead looks clearer, and the opportunities are broadening for both occupiers and investors.”

Click here to read the report.

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2024, the firm reported revenue of $9.4 billion across its core service lines of Services, Leasing, Capital markets, and Valuation and other. Built around the belief that Better never settles, the firm receives numerous industry and business accolades for its award-winning culture. For additional information, visit www.cushmanwakefield.com