From AI Data Centers To Sun Belt Apartments, Here Are 7 CRE Predictions For 2026

After a year clouded with uncertainty, the commercial real estate market is unlikely to clear up entirely in 2026, but bright spots may emerge in pockets of the industry. 

Several top commercial real estate experts shared predictions with Bisnow for how the market will change this year. Their forecasts include shifts that could benefit industry players — like a resurgence for Sun Belt apartments and a 10% jump in capital markets deal volume. 

But some sectors could face new problems, such as retail closures due to slipping consumer spending.

The data center boom that underpinned much of the nation’s economic growth in 2025 is expected to continue this year, and even if the artificial intelligence bonanza proves to be a bubble, experts think the data center real estate market will remain relatively immune. 

Here are seven predictions for 2026 that CRE experts shared with Bisnow:

Data Center CRE Will Stay Strong — Bubble Or Not

Artificial intelligence has been a prime fuel source for what some analysts characterize as an otherwise sluggish economy. CRE has been cashing in with a wave of data center projects across the country. 

If the AI “bubble” does pop in 2026, developers won't be left holding the bag, First American Senior Commercial Real Estate Economist Xander Snyder and CBRE Global Head of Research Henry Chin predicted. 

While growing startups are a big part of the rush that has left developers struggling to keep up with demand, so are tech goliaths like Google and Meta.

Snyder said AI is already starting to deliver modest productivity gains, but if the experimental tech bonanza does stall out in 2026, players like Google and Meta will still have other projects to complete.

“All of that is demand for data center space, regardless of whether some AI companies go under, which might happen,” Snyder said.

Chin predicted demand will continue to outstrip supply in 2026 and the construction boom will continue with particular ferocity in southern markets like Alabama, Georgia and the Carolinas.

“Those less-restricted states are going to see more developer focus,” he said.

Sun Belt Apartment Markets Will Regain Footing

Following a postpandemic wave of apartment construction starts, many Sun Belt cities went from a landlord’s market to a tenant’s market. But multifamily economist Jay Parsons expects the level of concessions landlords offer in those markets to decline next year.

“People will be surprised to see how fast some of the big Sun Belt markets come back from the supply-drenched slowdown,” he said.

The Sun Belt dominated RealPage's November list of the markets with the highest percentage of units offering concessions. The trend was particularly strong in Texas, with the San Antonio and Austin metro areas topping the list. Denver, Nashville and Las Vegas rounded out the top five, while Dallas came in at No. 9. 

Parsons expects concessions will start to come down later this year, and he said it won’t be dependent on a spectacular economic turnaround.

“If we see even solid economic growth, this big wave of lease-ups is going to fill up, we’re going to see concessions start to burn off,” Parsons said.

He was particularly bullish on Dallas, Houston, Nashville and South Florida, where he expects the concessions to ease in the second half of next year. Austin and parts of Phoenix like West Valley have an especially large supply glut to work through, so Parsons doesn’t expect the change to come as quickly there.

Transaction Volume Will Grow More than 10%

CBRE’s Chin predicted a resurgent capital markets environment will lead to ballooning U.S. CRE transaction volumes. He is expecting that metric to grow 12% to $530B in 2026.

Chin’s bullish prediction follows what he characterized as an unexpectedly strong second half of 2025. CBRE had projected 8% transaction volume growth, but as of mid-December, he said the metric was on pace to reach 16% by the end of the year.

The data center boom was a big part of deal volume growth, said MSCI Executive Director Jim Costello, but the trend is underpinned by distress in other parts of the market.

“In the beginning of the year, there was optimism and some price growth, but it’s weakened as of late,” Costello said.

Chin expects retail and office properties to constitute the majority of transactions in 2026. Those sectors are primed for the greatest rent growth with little new construction on the horizon.

He is also recommending owners sell their multifamily and industrial assets in some cases.

“There’s no point to hold out for such a long time,” Chin said. “Recycle your capital.”

10-Year Treasury Won’t Fall Much Below 4%

The yield on 10-year treasury bonds sat at 4.17% on Jan. 5, and Chin doesn’t expect it to get much lower in 2026. He thinks it could fall just below 4% in the fourth quarter but said the growing amount of debt the U.S. holds leaves it without much wiggle room.

Costello didn’t want to make a prediction on what actions the Federal Reserve will take with its benchmark interest rate this year, but he said banking on lower rates is a bad strategy.

“What they’ve done so far hasn’t really impacted CRE,” he said.

Interest rates are already at “incredibly low levels relative to history,” Costello said, and a younger generation of real estate players who made money “just by showing up” could be in for a rude awakening in 2026.

He recommended investors focus on identifying and executing structurally sound deals instead of betting on falling rates.

That is roughly the same advice Chin is passing on to CBRE’s clients, who he is encouraging to focus on rental income in 2026. While he is predicting some cap rate compression in the upcoming cycle, he thinks it will be milder than what the industry saw in the last one.

“That’s why we ask the investor to focus on income growth,” he said. “Your total return is largely coming from rental growth.”

Office Vacancy Will Stay Flat

Structural vacancy in the U.S. office sector will remain consistently high going forward, CoStar National Director of U.S. Office Analytics Phil Mobley said. But he doesn’t expect it to rise much above the current level of 14.1%.

“We project it to more or less stay flat nationally through 2026,” he said. 

The CRE data firm isn’t expecting much relief on the vacancy front until late 2027, Mobley said.

The prediction of flat vacancy rates would represent a new phenomenon, since vacancy has been consistently rising since the middle of 2019. He also projected that a shrinking construction pipeline and the ongoing residential conversion trend will further constrict supply in 2026.

Mobley also saw rays of hope in a falling sublease vacancy rate. In Q3 2025, the metric had fallen 70 basis points year-over-year, according to a report from CBRE. The 141.6M SF of available sublet space was down 27% from its peak in Q2 2023.  

Still, he saw year-over-year job growth of roughly 0.5% — down from 2% in the early 2010s — as an indication that office landlords shouldn’t expect a sea change anytime soon.

“We have kind of tepid demand,” Mobley said.

Big-Box Industrial Vacancy Will Hit Peak, Begin Dip

A record-setting wave of big-box warehouse projects was undertaken to satiate the pandemic e-commerce boom. Supply eventually surpassed demand, and many markets are still working through a glut.

Last year was defined by a major pipeline constriction. There was 269.9M SF in the pipeline in Q3 2025 after 213M SF was delivered year to date, according to Cushman & Wakefield. Those numbers were down from 309.3M SF and 335.8M SF in Q3 2024.

Because of this, First American's Snyder expects the sector’s vacancy rate to finally start falling nationwide after it has risen consistently since 2022.

“I think we’re very close to peak vacancy overall,” Snyder said.

“I don’t expect large-box vacancies to rise much beyond 10%,” he added.

The metric for spaces 500K SF and larger sat at 9.9% in Q3 2025, according to Cushman.

But that doesn’t necessarily mean rents are suddenly going to rally. The analyst expects flat or potentially negative growth for large bay properties. 

Asking rents for spaces above 150K SF fell 4.3% from $12.51 to $11.97 per square foot between 2023 and last year, according to a CompStak report published in July. The metric only fell by 3 cents between 2024 and 2025.

Small bay properties remain in short supply, but Snyder isn’t expecting a construction wave in that corner of the market, which provides slimmer margins for speculative builders. Even there, he is only anticipating single-digit rent growth.

Spending Decline Will Hit Mid-Market Retail

Credit card debt hit a record $1.23T last quarter, up from about $810B in Q3 2020, according to the Federal Reserve Bank of New York

Retail consultant Kate Newlin believes many consumers delayed their inevitable financial woes until January so they wouldn't ruin their holiday season. When their bills and debt resurface in the new year, she thinks spending will contract, leading to a hard 2026 for retail landlords.

“Right now, I doubt that expansion is on anybody’s to-do list in retail,” Newlin said of users.

The economy she described as “K-shaped” will offer some hope for luxury brands and bargain outlets like TJ Maxx and Dollar Tree. But Newlin believes a broad swath of middle-market retailers and restaurants like Kohl’s and Outback Steakhouse will close locations in 2026 as consumer spending dries up.

A wave of closures and brand consolidations could lead investors to pull back from the retail sector as landlords are forced to renegotiate leases to avoid vacancies, she said. While these will likely include concessions in the short term, Newlin believes most of these arrangements will be amortized so owners make at least some of their money back in the long term.