The outlook for commercial real estate: CRE chartbook
|Summary
The outlook for commercial real estate (CRE) is brightening. The Federal Reserve's monetary easing cycle has generated stronger capital flows, increased transaction volumes and firmer property price appreciation. Such momentum is likely to continue given our anticipation for the FOMC to deliver two additional reductions to the federal funds rate in the first half of 2026. CRE supply and demand should also move toward better balance against a backdrop of buoyant demand and thin development pipeline. All told, less restrictive monetary policy and resilient economic growth appear poised to propel the commercial real estate market forward in 2026.
- Economic growth poised for continued resiliency
We look for annual U.S. real GDP growth of 2.3% in 2026 on a more supportive fiscal policy environment and less restrictive monetary policy setting.
- CRE capital returning
Cuts to the federal funds rate are generating a broad-based rise in lending. MBA's origination index rose 22% year-to-year in Q3-2025, with most major capital sources continuing to show growth.
- Transaction volumes improving
Transaction volumes were up 13.2% on a year-to-date basis through October, with gains across most major asset classes.
- Property prices gaining momentum
Overall valuations were up 4.2% year-to-year in October, the strongest annual gain since 2022. Most asset classes and markets are registering positive annual growth.
- Supply and demand coming into better balance
Vacancy rates, for the most part, are still elevated but no longer rising sharply. The wave of CRE construction has peaked, and (outside of data centers) there is very little in terms of new commercial projects getting started. Meanwhile, resilient economic growth should continue to support CRE Demand.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.