2026 CRE Outlook: Key Expectations for the Year Ahead
From a positive investment forecast to the demand for data centers and AI, CPE Voices panelists discuss the future of the industry.
As the year wraps up, commercial real estate experts are reflecting on a few surprises—tariffs, a record 44-day government shutdown and the rise of AI, to name a few. Despite these challenges, the commercial real estate market stayed resilient, even rebounding in some sectors.
During Commercial Property Executive’s 2026 CRE outlook webinar, panelists from different sectors and backgrounds came together to discuss the state of the industry. Moderated by Editorial Director Suzann Silverman, industry professionals shared insights on market trends, investment opportunities and capital sources for the year ahead.
Richard Kleinman, Americas co-CIO and head of research and strategy at LaSalle Investment Management, opened with an economic and capital markets overview. He noted that steady growth and solid fundamentals have kept the U.S. out of recession. While the job market is slowing and some data was delayed by the government shutdown, forthcoming reports will offer more clarity for investors.
“In many sectors, we’re seeing the digestion of elevated new supply but expect moderate demand going forward,” said Kleinman. He added that life sciences have a surplus of new space, medical office remains stable and multifamily outperformed expectations.
Positive outlook on investment
As uncertainty has been an overarching theme for commercial real estate recently, investors have been hesitant to make any big plans within the sector, though the panel agreed things were looking up. As interest rates have lowered, this has fueled some optimism for investors to come back not just in 2026 but even further.
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Ryan Krauch, senior managing director at Affinius Capital, is optimistic looking into the 3- to 5-year window. He shared that in this cycle, investors have been extremely disciplined, so there is capital to deploy and dry powder is in a healthy state, which is good for investing.
Kleinman backed this statement, saying that he is optimistic about investors coming back into real estate in 2026, shedding light on the denominator effect and explaining how the stock market has been playing into it.
“I think more and more investors are positioned to allocate new capital to real estate,” he said. “They just need confidence in the market to start doing that. I think several are holding back, and maybe it’s because of real estate, but it also might be that they don’t believe the stock market values and don’t want to end up over-allocated.”
The AI and data center bubble
Another topic that panelists discussed included how data centers and the AI boom have been dominating the industry this past year. The growth of this technology and the demand has been felt in other asset classes as well.
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Jeff DeBoer, president & CEO of The Real Estate Roundtable, shared that AI companies are a major force behind office leasing in suburban Boston and similar markets.
On the development side, data centers continue to expand rapidly to meet rising demand. The panel noted that as technology advances, the growing energy requirements needed to support this trend will likely become a major topic of discussion in the future.
“I think data centers right now are going to be the headline for the foreseeable future,” Krauch stated. “That’s where I see a lot of energy and focus and there’ll be some effects from that to deal with, if not in 2026, shortly thereafter.”
Thomas Whitesell, head of the debt investment group at Kennedy Wilson, also suggested that we are in an “AI bubble” which is driving up the stock market, with the top 10 companies working together to keep the bubble going. Moving into the second half of the year, he is anticipating that the bubble will start to deflate over time.
Proceeding with caution in 2026
Looking ahead, the panelists were saying that overall it’s safer to look with caution as things like tariffs, interest rates and monetary policy effects continue to work their way through the market. Merrie Frankel, president at Minerva Realty Consultants, shared her belief that development and investment will perform slightly better next year than they did this year, especially with lower interest rates and dry powder to invest.
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“I think it’s going to be somewhat choppy between tariffs, interest rates and a bifurcated job market,” Frankle said. “But I’m feeling somewhat more optimistic, with the amount of debt and equity deals out there, and the dry powder out there, which I think will spur the business on.”
Whitesell echoed the same sentiment. He believes that the industry will see more of the same from 2025 in 2026, especially in the office sector in high-performing markets. He brought attention to Class A assets in New York City and Los Angeles, where the demand is high and vacancy rates are low. But other asset classes and other areas are not performing as well.
New policies like tariffs, the One Big Beautiful Bill and the data that comes in following the government shutdown call for a wait-and-see attitude on how this will affect the market in the long term. This approach will help professionals make more informed decisions on how they want to navigate the business in the coming year.
“What is crazy about the last few years is every metric you can think of that we normally use to predict macroeconomic trends or real estate trends has been either dead wrong or so confusing and muddled that it’s impossible to piece out what’s going to happen next,” Krauch said.
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