Before the 2026 Market Outlook —

Our CRE Predictions

By Joseph Italiaander | Broker

There is plenty to be excited about in the commercial real estate world as we turn the page to 2026. After a sluggish 2024, demand for CRE and dealmaking appetites rebounded in 2025. Despite Q1’s strong economic headwinds—tariffs, geopolitical uncertainty, stubborn interest rates—‘return to office’ mandates and favorable policies, like the economic bonus depreciation, spurred development as the year progressed.  

And I expect the momentum we saw in the second half of 2025 to carry into 2026. For starters, we’ll continue to see low-interest COVID-era loans reach or near maturity, which should prompt more conversations about the benefits of selling property vs. refinancing at significantly higher rates. All signs point to increased sales volume in 2026 based on healthy liquidity from both buyers and regional banks .  

It also seems like we’ll see sustained interest rate certainty. Rewind to last year when we thought the Fed would drastically cut rates leading to significantly lower capital costs; this wishful thinking led both buyers and sellers to be patient. And while we did see a series of small cuts in 2025, it didn’t produce the results that many borrowers and investors hoped for and retail rates hovered between 6-7%.  

As we enter 2026, there are few headlines predicting significant cuts for the year ahead. Though that might seem like a headwind to the industry, I believe it represents a ‘new normal’ in CRE lending and will bring buyers and sellers closer to price equilibrium, eliminating the urge to ‘wait it out’ for lower rates. 

This year, it’s reasonable to expect higher leasing volume across both the industrial and office sectors, which have largely slumped over the last 12-24 months. Even though we’ve seen strong demand for Class A office space in Portland, demand in the suburbs has been virtually non-existent. As employers grapple with higher overall costs, I expect renewed demand for suburban offices that present convenient, cost-efficient options. And as tariffs persist, I expect industrial leasing to rebound as operators slowly but surely grapple with the current economic environment.  

Of course, a positive 2026 hinges on healthy consumers, increased economic certainty, and a resilient labor market – all of which have been areas of concern over the past year. However, as things start to stabilize, I believe we will see a significant increase in transaction volume across most CRE sectors, leading to an exciting and prosperous 2026!