Following a challenging year, the outlook for 2026 is more positive. Improving market fundamentals, including positive economic growth across most major markets, easing trade concerns, moderating inflation and lower interest rates will contribute to a more stable operating environment. And yet, the convergence of economic, technological, and social forces leaves organizations across the globe navigating a complex and evolving environment, with the commercial real estate industry on the precipice of substantial – and exciting - transformation . 

This Outlook examines six critical forces reshaping commercial real estate: the imperative for efficiency in a higher-cost environment; intensifying supply shortages across property types; ‘experience’ as the new value driver in real estate; the maturation of AI implementation beyond pilot programs; the convergence of buildings with power systems; and the democratization of commercial real estate investing. Each represents both challenge and opportunity for real estate actors.

Lower supply is also evident across most other property types. Globally, industrial and logistics deliveries in 2026 are expected to be 42% below the peak levels seen in 2023, with less speculative new construction and greater competition for land from other uses such as data centers and manufacturing. Retail supply is near all-time lows in mature markets, while multi-housing development in the U.S. is down by more than three-quarters from its recent peak and still limited in many countries across Europe and Asia Pacific. Data center construction continues to be the outlier and is surging ahead with capacity forecast to increase by 19% in 2026 as hyperscalers, among others, commit record amounts of capital.

At the same time as increasing shortages of in-demand space, the need for extensive repositioning or retrofitting of properties at risk of obsolescence will accelerate. The top 10 largest office markets for repositioning have more than 130 million square meters of space at risk of stranding, and cities such as Paris, London, New York, Boston and Chicago will have some of the most compelling opportunities in this space. Owners are becoming more attuned to the advantages of retrofitting and repositioning existing assets, including faster construction timeframes, reductions in embodied carbon and lower costs. Energy-focused improvements not only help with managing expenses but can also yield a 55% higher return when done earlier in a building's lifecycle.

Real estate organizations are approaching a critical juncture in their AI adoption journey. Following the rapid expansion of AI pilots in 2025 - with 92% of corporate occupiers and 88% of investors in our recent technology survey initiating AI programs - the industry will face increased scrutiny over implementation effectiveness and scalability in 2026.

Currently, organizations are pursuing an average of five AI use cases simultaneously (across data workflows, portfolio optimization, energy management, market analysis and risk modelling), yet only 5% report achieving most of their program goals. Private investors and investment management firms were slightly behind listed investors and institutional investors in their AI results.

In 2026, AI pilot fatigue will emerge as organizations struggle to scale 2025's AI initiatives beyond experimentation. Those that launched multiple pilots without systematic planning will face mounting pressure to demonstrate meaningful ROI, with many discovering their fragmented approach has limited scalability. Companies lacking foundational capabilities - data infrastructure, change management, talent - will hit implementation walls, forcing decisions between strategic investment or AI program abandonment. 

60% of investors across all types still do not have a unified technology strategy for their real estate functions and asset types. For occupiers, 70% do not have a change management framework for AI. 50% are not sufficiently resourced in terms of digital and AI talent. Industries such as life sciences and professional services are particularly challenged in CRE AI talent availability. 

The widening performance gap between systematic implementers and experimental pilots will become undeniable, with leading organizations pulling further ahead while laggards struggle to justify continued AI investment. As AI transformation shifts from productivity and efficiency to workflow redesign and business model innovation, the value propositions of real estate players will change. Strategic capabilities to open up new markets, operate with agility, and provide a data-driven edge in decision- making will become gradually more important in defining success.