U.S. trade policy appears to have reached a state of temporary stability, at least with respect to most country tariffs. As tariff concerns have eased, fiscal sustainability risks have risen, driving up global bond yields. Most major markets are expected to see continued economic expansions this year and the outlook for 2026 is more positive, supported by lower average interest rates and a more predictable global trading environment.

Occupier activity was mixed across markets and property types during the quarter but remained resilient. Despite ongoing supply chain uncertainty, sentiment is improving in industrial markets as pent-up demand returns. Retailers continue to expand in core locations, while global office leasing over the first nine months of the year rose further to its highest level since 2019.

Global capital markets performed strongly in the third quarter as trade policy uncertainty reduced and major central banks continued to loosen monetary policy. Direct investment volumes rose further, with stable property fundamentals and highly liquid debt markets acting as catalysts for increased transaction activity. Fundraising marked a significant rebound after several challenging years, driven in part by strong performance in debt strategies and growing investor interest in secondary funds.

The global vacancy rate fell during the quarter, with decreasing availability of prime, central space. Groundbreakings have fallen to a new record low in the U.S. with three quarters of the remaining pipeline already pre-leased, while new construction starts are at the lowest level in over a decade in Europe. Occupiers with large requirements will need to explore options earlier as competition for the best space intensifies. 

Future trends: Focus shifting from workplace planning to implementation

Short-term: Although portfolio optimization remains a priority for many companies, higher utilization targets, reduced downsizing rates and centralization as tenants upgrade into higher-quality space are expected to support continued growth in leasing through year-end 2025 and into 2026.

Long-term: Affordability and availability will be increasingly in focus for occupiers as available new space in prime central submarkets remains limited. Companies will need to start searches earlier and maintain flexibility; renewals and extensions will account for a larger share of activity, while leasing in refurbished projects and core-adjacent submarkets is likely to increase.

Logistics leasing activity improved in North America and Europe during Q3, although greater occupier caution was evident in some Asia Pacific markets. New supply has fallen significantly from peak levels and will continue to decline through 2026. Vacancy is already contracting in Asia Pacific, while availability is likely to peak and start declining in both North America and Europe over the next 12 months.

The living sector is on track for a strong 2025, with investment volumes on course to reach pre-Covid averages. The U.S. is leading the way with the third quarter notching the highest deal activity of the year. Volumes have also risen strongly in Europe and Asia Pacific , where strong demand for purpose-built student accommodation (PBSA) assets has been evident.