Global Real Estate Perspective, February 2026

Global office leasing activity rose again in Q4, with volumes over the full year increasing by 5% to the highest level since 2019. Gateway markets and larger deals drove leasing in North America and activity also rose in Asia Pacific, whereas longer deal timelines in Europe contributed to a marginal slowing.

The global vacancy rate continued to decline after peaking in mid-2025. Groundbreakings are at record lows 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. The dwindling availability of high-quality, central space is driving supply shortages and elevated rental growth for high-end space in both regions. In Asia Pacific, a tenant focus on quality and consolidating portfolios into central locations is helping to balance an elevated supply pipeline in some markets.

Future trends: Workplace strategies evolving from mandates to experience-driven environments
 

Short-term: With over 50% of organizations globally requiring 3-4 days in-office, workplace experience and creating ‘commute-worthy’ spaces are increasingly important for driving utilisation and talent strategies. The ongoing increase in office attendance has pushed many large organizations into expansion mode, which is expected to support a continued gradual recovery in leasing through 2026.

Long-term: Affordability and availability will be increasingly in focus for occupiers, with limited new space in prime central submarkets. 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. For property owners, this supply-demand imbalance presents an opportunity to retrofit and reposition existing assets.

Future trends: Stable fundamentals as expansionary activity is tempered by limited supply

Short-term: Retailers will continue to implement strategic expansions and portfolio rebalancing, with a focus on prime destinations and smaller formats. Limited availability and new supply are likely to temper leasing activity but will support occupancy levels and rents for quality space.

Long-term: Demand from services-led tenants and for flexible ‘experiential retail’ formats is growing, with stores acting as engagement hubs for brand connection, events and services that cannot be replicated online. An increasing bifurcation in spending patterns will contribute to pressure on mid-market retailers and lead to outperformance for premium and experiential segments as well as essentials.

Global transaction volumes for the living sector finished 2025 up 24% over the year. The U.S. continues to be the dominant market accounting for two-thirds of investment, with 31% in EMEA and the remaining 3% in Asia Pacific. Further growth is expected this year on the back of improving debt availability in major markets including the U.S. and UK. Fundraising activity targeting living growth markets in Europe and Asia Pacific has also been robust, leading to a rising tide of capital targeting the sector globally.