NAREE Special Report: New Cycle for CRE

June 7, 2026

Investment Finance National News More Office

CBRE’s Mowell predicts pros and cons for real estate this year.

Matt Mowell, senior managing economist at CBRE, presents during NAREE's 2026 conference. Photo by Suzann D. Silverman — Matt Mowell, senior managing economist at CBRE, presents during NAREE’s 2026 conference. Photo by Suzann D. Silverman

This year is both good and bad for commercial real estate, according to Matt Mowell, senior managing economist at CBRE. During his presentation at the National Association of Real Estate Editors’ 60^th Annual Real Estate Journalism Conference, which took place in Miami last week, he predicted 2026 will be a “good vintage year” for commercial real estate returns, the beginning of a new cycle with less yield compression than in previous cycles and devaluations already a thing of the past.

At the same time, CLO and CMBS issuance has flattened, which he termed “a cause for concern.” And bidder pools have become shallower. “I think we’re going to have to pull back some of the very strong expectations that we had at the beginning of the year,” he advised.

The lender caution is largely due to the threat of rising inflation. Mowell anticipates the consumer price index to end the year up 3.7 percent over fourth quarter 2025, with GDP growth at 2.2 percent and job growth at 0.2 percent. After that, though, he expects inflation to start to normalize. And he says real estate will remain attractive relative to other asset classes.

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However, this cycle will be driven individually by sector, he noted. Office will likely be the lead sector in average annual total returns over the next five years, as it continues to adjust to its new reality. “There’s more office space being torn down or converted than being built,” he said, which is helping it correct, and there’s some room for it to fall a bit more before becoming a growth story. He pointed to recovery in cities like San Francisco and Manhattan, where better office space is performing well and he expects higher rent growth over the next five years, although he also noted the large amount of bad debt still to be worked out across the sector, with banks tiring of kicking the proverbial can down the road.

Meanwhile, retail continues to strengthen, with its average annual total return likely to be around 7.5 percent from 2026-2030, while multifamily’s will be slightly lower as it works through the recent oversupply in the Sun Belt, and the industrial sector has become “very bifurcated,” weakened by regulatory issues while new space attracts activity.