The U.S. commercial real estate market is heading into 2026 on steadier footing, according to Integra Realty Resources’ annual outlook—but the “stability” is far from uniform across sectors and geographies. The report suggests investors have largely moved past the wait-and-see posture that defined the last couple of years. Instead of holding out for perfect clarity, they’re increasingly pricing uncertainty into deals, restructuring debt at higher costs, and pursuing transactions where fundamentals still justify the risk—especially for high-quality assets in growth markets and for discounted opportunities in weaker-demand areas.
That said, IRR flags the labor market as a key wildcard. Employment growth is expected to be soft, and that matters because jobs drive demand across property types—from office absorption to consumer spending that supports industrial and retail activity. Right now, job gains are concentrated in health care and leisure/hospitality, while transportation, manufacturing, and professional services are shrinking. If hiring slows further in 2026, the report warns, it could leave commercial real estate in a more fragile position overall.
On the capital markets side, conditions look more constructive. Lending activity picked up in 2025, largely due to refinancing volume. IRR notes that most lender groups and most property types are back near pre-pandemic lending levels—office being the major exception. Put together, the outlook for 2026 is mixed: there will be real opportunities, but they’re likely to be highly localized, favoring groups that can act quickly and underwrite conservatively.
Office Continues To Split Into “Haves” and “Have-Nots”
No sector shows the market’s unevenness more clearly than office. IRR describes a widening divide between struggling properties and top-tier buildings in select submarkets. While the broader office market is still dealing with high vacancies and muted rent growth, some high-quality, upper-tier assets are showing early signs of improvement—small but noticeable upticks in leasing, investor interest, and rents.
Even with that progress at the top, the overall office recovery remains patchy and sensitive to broader economic and employment conditions. IRR describes the rebound as uneven and “U-shaped,” with outcomes varying widely by market and asset quality. One notable shift: central business districts are starting to outperform suburban office areas in rent growth, reversing the pandemic-era trend that favored suburban locations.
Rent growth, however, is still delicate. In many cases, “growth” is being propped up by concessions like free rent and tenant improvement packages—particularly in Class B and C buildings. When adjusted for inflation, rent gains are often still negative, and demand isn’t strong enough to meaningfully lift all boats.
Employment patterns add another layer of complexity. Office-using job growth has been only slightly positive and is still lagging overall job growth, which has been easing. IRR points out that over the last two years, month-to-month office-using employment gains were negative in the majority of months—highlighting how cautious employers remain about hiring, even as productivity improves through technology.
Development and leasing momentum are also uneven across markets. IRR identifies Charleston, South Carolina as the only U.S. office market currently expanding. Many other office markets are either in recovery or recession mode, which typically translates into limited new development and slower leasing velocity. Some large gateway markets—New York City, for example—are seeing stronger tenant demand tied to infrastructure, amenities, and proximity to large employment bases, though rent growth is still described as fragile. Meanwhile, markets such as San Francisco and Seattle remain under pressure, and several former standouts—including Austin, Denver, Nashville, and Raleigh—are experiencing more pronounced downturn conditions.
Source: Commercial Search