The commercial real estate market is expected to gain momentum in 2026, supported by a lower interest-rate environment and a steady pipeline of transactions that should translate into stronger leasing activity and rising investment volume.

Office and retail properties, in particular, are positioned for continued recovery as both sectors move further beyond the disruptions that defined the pandemic years. Evolving consumer habits, shifting workplace expectations, and increased reliance on technology—especially artificial intelligence—are prompting occupiers to focus on flexibility, adaptable layouts, and infrastructure that can support rapid change.

Within the office sector, performance is becoming increasingly polarized. Newer, high-quality buildings continue to outperform older, secondary assets, tightening the supply of prime space in many markets. As top-tier availability diminishes, demand is beginning to spill into adjacent, well-located properties that offer strong amenities such as access to public transit and on-site food and beverage options.

This dynamic is already visible in major gateway cities, where quality space in desirable locations has become increasingly scarce. Sun Belt markets such as Dallas, Phoenix, Tampa, and Charlotte are also showing meaningful progress along their recovery paths.

While vacancy rates among non-prime office buildings are beginning to decline on a year-over-year basis for the first time in several years, not all properties are benefiting equally. Tenant behavior continues to signal a strong preference for higher-quality space, underscoring the role of real estate as a strategic business asset heading into 2026.

Prime properties are expected to command premium pricing, while non-prime assets may see greater flexibility through creative deal structures, adaptive reuse strategies, and tenant-friendly lease terms. Renewals—particularly in office and industrial properties—are likely to include increased tenant improvement allowances and additional free rent as owners compete to retain occupants.

Large corporate users are also expected to re-enter the leasing market in greater numbers, helping office activity in 2026 exceed pre-pandemic levels.

On the retail side, growth is anticipated among grocery, discount, and service-oriented tenants that depend on physical locations to reach customers. Many digitally native brands have come to recognize that brick-and-mortar stores play a critical role in fulfillment, brand visibility, and customer acquisition.

This trend should continue to support rent growth at open-air and grocery-anchored retail centers, particularly those located in strong suburban markets. High occupancy levels and limited new supply in these areas position them to outperform as retailers increasingly prioritize physical footprints as part of an omnichannel strategy.