Commercial Real Estate: An Outlook to 2026

When this article first looked ahead, the commercial real estate market was working through a difficult adjustment. Two years later, the picture has changed in important ways. According to CBRE's Midyear Real Estate Outlook, published in August 2026, leasing momentum from the first half of the year is expected to carry into the second half, and most property types are on firmer ground than many investors expected. Higher inflation and elevated interest rates remain the main challenges. Here is where each sector stands and what it may mean for investors.

Office: A Slow Recovery With a Wide Gap

The 2024 outlook warned that U.S. office vacancy could climb to about 19.8 percent. CBRE's latest forecast is more encouraging: it now expects the national office vacancy rate to finish 2026 at about 18 percent, which is slightly lower than its own earlier forecast for this year. Vacancy has begun to decline after years of increases, helped by the fact that demolitions and conversions of older buildings are now outpacing new construction.

The recovery is uneven. CBRE describes a widening gap between prime buildings, meaning modern, well-located and amenity-rich space, and everything else. Vacancy in prime buildings has fallen substantially, while older, less competitive buildings continue to struggle. Occupiers are choosing quality over quantity, often taking less space in better buildings. Technology companies have been a notable source of demand, accounting for about one-fifth of first-half leasing, and CBRE expects downtown vacancy to fall below suburban vacancy in 2027.

For investors, the lesson is the same as before but sharper: the office market is no longer one market. Property quality, location and the ability to be repositioned, or even converted to another use, matter more than ever.

Industrial: Record Leasing

Industrial and logistics remains one of the strongest sectors. CBRE now expects total industrial leasing of roughly one billion square feet in 2026, which would be a record, and it raised its leasing growth forecast for the year from about 5 percent to about 10 percent. Demand is being driven by companies moving production closer to home, by outsourced logistics, and by tenants leaving older, functionally outdated buildings for modern space. Because little new speculative space is being built, supply remains disciplined.

Retail: Tight Space and Experience-Driven Tenants

Retail has been a quiet success story. After a long period with very little new construction, CBRE describes retail availability as historically low and expects it to keep declining. Landlords with well-located space have more leverage, and the sector is expected to see strong investor interest this year. As the earlier version of this article noted, successful retail increasingly offers something beyond a transaction, such as convenience, services, food or an experience, and many centers are blending shopping with dining, fitness, healthcare and other everyday uses. Physical stores and online sales now work together rather than compete.

Multifamily and Data Centers

Multifamily vacancy is holding steady, and CBRE expects a stronger second half supported by solid job growth. Multifamily is also expected to see the largest increase in investment activity of any major property type this year, at about 20 percent. Data centers continue to be the fastest-moving niche: CBRE reports that projects under construction are expected to be about 80 percent preleased this year, compared with a historical range closer to 40 to 50 percent, reflecting demand tied to cloud computing and artificial intelligence.

Capital Markets: Rates, Inflation and Investor Activity

CBRE expects total commercial real estate investment volume to rise about 16 percent in 2026. That is encouraging, but the financing backdrop is less friendly than many hoped a year ago. CBRE now expects short-term interest rates to hold steady for the rest of the year instead of falling, and it expects the 10-year Treasury yield to stay above 4 percent. Inflation has been running higher than forecast, in part because of elevated energy prices and geopolitical tension, and CBRE expects it to recede gradually. Capitalization rates are expected to hold steady for the rest of 2026, with compression possible in 2027. Overall economic growth is tracking at roughly 2 percent.

The practical takeaway is that deals are getting done, but underwriting still needs to assume that borrowing costs will not fall quickly. Investors who rely on a rapid decline in rates to make a deal work are taking on risk.

What This Means for Coastal Carolina Investors

National trends do not translate evenly to every local market, and the Coastal Carolinas have their own dynamics, including steady in-migration, seasonal tourism, and the added cost and insurance considerations of coastal property. Still, the national themes are useful guides. Quality and location matter in every sector. Retail and service-oriented properties tied to growing communities can benefit from limited supply. Multifamily and residential rental properties remain attractive to many investors. And across all property types, careful due diligence on insurance, flood exposure, financing terms and realistic rents is essential.

Conclusion: Selective Opportunity

The outlook for 2026 is better than the outlook two years ago, but it rewards selectivity. The strongest opportunities tend to be in high-quality, well-located properties and in sectors with limited supply, while older or poorly located assets face headwinds. If you are considering a commercial or investment property purchase in the Coastal Carolinas, I would be glad to talk through your goals and the local market.

Figures are from CBRE's U.S. Real Estate Market Outlook 2026 and its Midyear Review (August 2026), and forecasts can change. This article is general information, not investment, legal or tax advice. Please consult your attorney, lender or tax professional about your situation.