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. 

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.

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.

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.