To what extent could macroeconomic volatility and policy uncertainty impact the pace of the commercial real estate recovery?
Is now the moment to recommit to the property market comeback?
Where does upside exist within a bifurcated CRE loan market?
How can strategic partnerships expand access to CRE capital and diversify investment channels?
Are CRE organizations investing in AI progress, or just paying for promise?
Macroeconomic volatility and policy uncertainty may put the CRE industry recovery on pause, but not for good
In last year’s commercial real estate outlook, we anticipated that 2025 could mark a recovery for the global CRE industry—buoyed by an expected return of deal activity, more favorable lending terms, greater industry collaboration, and advances in artificial intelligence. As we write a year later, it hasn’t exactly played out that way, largely due to an unpredictable global macro environment, which may affect how soon, and to what degree, the industry could fully recover in the next 12 to 18 months.
Trade and regulatory uncertainties have complicated decision-making, prompting some leaders in the CRE industry to rethink their approach. We do not expect this to abate any time soon as trade negotiations and legal challenges continue. That said, opportunities for growth likely exist—for those who understand the industry’s geographic, asset, and macro-level nuances, and remain agile and forward-thinking.
Navigating a pause in the recovery
Results from Deloitte’s 2026 commercial real estate outlook survey help us confirm what macroeconomic conditions are likely of most concern to global owners, investors, and the CRE industry overall, as well as how they think their businesses, strategies, and technologies might be impacted. The survey collected input from over 850 global chief executives and their direct reports at major real estate owner and investor organizations across 13 countries (see methodology).
When asked how our survey respondents expect their revenues and expenses to change for the coming 12 to 18 months, there was a slight pullback in optimism from last year’s survey. Eighty-three percent of our respondents expect their revenues to improve by the end of the year compared with 88% last year. And across all surveyed spending areas, including operations, office space, and technology, fewer respondents plan to increase spending (down 5%), while more expect to keep spending flat (up 8%). Still, 68% anticipate higher expenses this year.
We noticed a similar pattern around expectations for CRE fundamentals. Many respondents still expect all conditions surveyed, like rental rates, leasing activity, vacancies, and cost of capital, to improve through 2026 (65%), compared with last year (68%). Despite macroeconomic uncertainties, CRE fundamentals don’t change overnight, and growth is still expected across most asset classes and most geographies.
Overall, for business and industry expectations, this year’s CRE outlook sentiment index (figure 1) scored 65—well above the 2023 trough (44), but just below last year’s high (68), indicating that optimism persists.
Sustained optimism is not without some hesitations, though. When asked about what macroeconomic trends could most negatively impact their financial performance for the next 12 to 18 months, respondents identified capital availability, elevated interest rates, cost of capital, currency volatility, and changes in tax policy most often (figure 2). Interestingly, cyber risk as a concern declined significantly among respondents from a score of two last year to six this year. It is also noteworthy that respondents’ worries increased about employee retention, which went up to score eight this year, from 12 last year.
The top three responses pull on common threads—capital availability, elevated interest rates, and cost of capital are all likely tied to concerns around accessing CRE debt markets, coupled with interest rates that are still perceived to be higher for longer—a recurring theme from last year’s survey. Though as of the September meeting of the US Federal Reserve, interest rates were cut for the first time in nine months by a quarter of a percentage point, with indications there could be two more rate cuts by the end of 2025.1
Changes in tax policy resurfaced as one of respondents’ top five concerns for the second consecutive year. We estimate this remained elevated again due to anticipation surrounding recent US tax proposals, such as Section 899, which—while ultimately not enacted when legislation was signed into law on July 4, during the time of survey fielding—would have increased rates on foreign investment into the United States.2 Uncertainty around the future of the Pillar Two regime could also be a factor.
Lower in the results was a new entry to this year’s response options—international trade policies—which ranked ninth globally but was the fifth-biggest concern for Asia-Pacific respondents. While international trade headlines have likely been a factor behind economic uncertainty, CRE leaders from our survey are seemingly less concerned with its potential impact to their financial conditions for 2026. This may be, in part, due to global owners and investors coming to expect a more volatile trade environment after initial discussions, as well as some regions and asset classes around the globe being relatively sheltered from international trade risk due to shifts in structural trends, such as European multifamily properties3 or the Japanese health care sector.4
READ MORE HERE...