For real estate capital markets, the environment strengthened notably in the second half of 2025 and momentum is expected to build further in 2026. We expect debt markets to remain very active and for lender appetite to continue to broaden across property sectors. Over the next year we anticipate the competitiveness of investor bidding to rise further as the real estate investment cycle gains momentum, resulting in an expansion of transaction volumes through the year. The AI infrastructure boom will continue to drive demand for data centers, while the Living sector will remain the world’s largest investment sector, with growing investor demand across all forms of housing. Markets with deep product pools will continue to be active and we expect growing demand in a range of countries, from Australia to Spain.

Meanwhile, leasing demand is expected to strengthen across many markets and property types in 2026. Office and industrial take-up are projected to increase globally, with growth in most major countries including the U.S., India and the UK. The impact of lower new construction will become progressively larger in the office sector as occupiers looking for new, large-block space face fewer options and higher rental rates. In supply-constrained locations, shortages of quality space – particularly acute in Tokyo, New York and London - will mean demand broadens beyond the top end of the market. Industrial and logistics deliveries are also falling globally, which will contribute to contracting vacancy as leasing increases. 

Organizations across all sectors are confronting an increasingly expensive operating environment as multiple external cost pressures converge. Debt and borrowing costs have risen as concerns about government fiscal sustainability have spilled over into private credit charges; employers face mounting labor expenses from rising payroll taxes, persistent skills mismatches and widespread worker shortages. Construction materials and fit-out costs are also elevated and face further upward pressure in 2026. For example, in Europe ‘all-in’ cost inflation for 2026 in the UK and Germany is expected to be in the range of 2.7-3% and 3.5-4% in the U.S., while estimates are higher in parts of Asia -Pacific with construction costs in Singapore and Australia predicted to rise by 5-6%. 

For investors, developers and occupiers alike, this confluence of factors has pushed cost management into the number one spot on their list of concerns: 72% of corporate real estate leaders have identified costs and budget efficiency as their top priority as we head into the new year. 

In 2026, new supply will decline further across most commercial real estate property sectors in North America and Europe. Economic uncertainty combined with high build and finance costs (see trend 1) is continuing to push construction starts lower following a decrease in development during 2025. As organizations move through the next 12 months, the impacts from declining availability of modern space will become progressively larger for both occupiers and owners.

In the office sector, development is at an all-time low in the U.S., with completions set to fall by 75% in 2026 and three-quarters of the remaining pipeline already pre-leased. New construction starts in Europe are at their lowest levels since 2010, and deliveries are projected to decline by 5% next year following an equivalent decrease in 2025. Supply shortages of top-quality offices will be particularly acute in cities like Tokyo, New York and London. With leasing activity increasing, occupiers looking for new, large-block space will face fewer options and higher rental rates. This will bring availability and affordability into sharper focus as demand broadens beyond the top end of the market.

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.

Design trends are moving in the same direction, where people-centric ‘street-to-seat’ journeys, social connection and immersive, tech-enabled environments are the focus, transcending retail and driving office experiences too. Most companies have defined their specific in-office expectation and our research shows that employees broadly understand and accept current attendance frameworks, as 66% of employees globally say their employer has a clear policy and 72% view it positively. But understanding doesn't equal showing up. Support and compliance rise when the office feels worth the commute; resistance correlates with poor comfort, limited autonomy and weak wellbeing support.

The new challenge is harder: creating environments in which people actually want to work, with better wellbeing and performance outcomes for businesses. The organizations pulling ahead are optimizing for experience, not just occupancy. 

What wins attention in retail and hospitality also wins in the office: wellness and nature (73% say more greenery near their workplace would improve wellbeing); personalization (74% prefer places that recognize and tailor to them); and convenience through multi-amenity access. When employees rate their workplace experience highly, 84% also feel positive about attendance expectations. 

Put simply: people don't reject the office - they reject a bad office experience. This transcends physical design principles; location, access to amenities, and frictionless experiences are imperative in creating value for users. Investors and operators with a focus on location strategies and place-making will capture more users by creating environments that feel intuitive, connected, and genuinely worth engaging with. 

Location strategies are increasingly focussed on secondary and lifestyle markets, to meet talent demands for more vibrant workplace neighborhoods and liveable cities. In the U.S., JLL research shows that offices located in ‘lifestyle districts’ that have access to amenities like entertainment venues, outdoor pavilions and waterfront attractions can attract a 32% rental premium. And employees agree, : our recent survey shows that 67% of people want to work in a vibrant neighborhood, rising to 74% of 25-34 year olds. 

Experience itself will become even more important in 2026 across sectors and geographies. The convergence of talent competition in key locations, escalating rates of employee burn-out rates and AI powered changes to work tasks will converge in 2026, requiring employers to reflect on how their workspaces are influencing employee experience and ultimately business outcomes.

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.

In 2026, the relationship between real estate and energy will shift from adjacency to interdependence. Reliable, clean and affordable power will sit alongside location as a defining factor of real-estate competitiveness . The built environment is no longer positioned at the edge of the energy transition. Instead, buildings are beginning to operate as integrated parts of the power system - generating, storing and managing electricity while participating in new forms of local energy markets.

The strain on power systems is focusing efforts to increase capacity. Global power demand from data centers alone is projected to have risen 21% in 2025 and will more than double by 2030. In areas near major data--center hubs, electricity prices have already increased as much as 267% for a single month over the last five years.

The energy system cannot expand quickly enough to meet accelerating demand and the implications are landing at the asset level. Energy costs are proportionate to as much as 26% of rental value, making efficiency essential for competitiveness. But the opportunity for real estate extends beyond cost avoidance. With rising price volatility, outage risks and surging demand, buildings can increasingly help address these pressures through distributed energy solutions. 

In markets such as California and New Jersey as well as Germany, strong policy frameworks and elevated electricity prices are already driving rapid uptake of rooftop PV and behind-the-meter storage as occupiers seek stability and resilience. In China, building owners and occupiers are accelerating rooftop-solar adoption to secure predictable power and hedge against grid variability. The trajectory is clear and these markets are at the forefront: buildings are moving from passive consumers to active energy resources — and assets able to integrate onsite solutions can unlock revenue uplift of 25% to 50% compared to rent.

The commercial real estate landscape of 2026 will reward organizations that embrace strategic adaptation over tactical responses. The six forces outlined - cost pressures, supply constraints, experience as a value -driver, AI maturation, energy convergence and investment democratization - are not isolated challenges and opportunities but interconnected dynamics that require holistic thinking and coordinated action.

For investors, success in this environment demands moving beyond traditional real estate management to integrated asset strategy that considers operational efficiency, experience, technological capability, energy performance and capital access as unified components of competitive advantage. Investors that view these forces as opportunities for differentiation rather than obstacles to overcome, will emerge as leaders in the transformed real estate ecosystem of 2026 and beyond.

For occupiers, the companies that thrive will be those that recognize real estate not merely as an operational necessity, but as a strategic platform for innovation, efficiency and growth. As the industry navigates this period of unprecedented change, the organizations that invest in comprehensive transformation-balancing immediate cost pressures with long-term strategic positioning-will define the future of commercial real estate.