Welcome to 2026! Like many of you, we’ve spent the past month parsing annual forecasts from our most trusted sources, separating signal from noise to assess where the market stands and where it’s headed. After reviewing the data and debate, our house view is refreshingly simple: 2026 marks a return to supply-and-demand fundamentals as the primary drivers of commercial real estate value.

After years of excess, 2026 continues the dose of sobriety we experienced in 2025. An extended hangover followed the era of declining rates that pushed marginal (and often highly levered) investments to the brink once interest rates reset higher. In 2025, the recovery began to take shape as supply deliveries peaked, lenders re-entered the market in force, and price discovery became more functional. Today, we find ourselves in a market characterized by elevated but stable interest rates, above-average vacancy in several sectors, and modest yet durable demand.

As disciplined investors re-engage and debt markets remain liquid, transaction volumes have rebounded from cyclical lows and are expected to rise meaningfully throughout the year. Importantly, the source of returns is shifting. The appreciation-driven playbook of the low-rate era is giving way to an income-focused market, where operational execution and asset management drive value creation. This transition reflects a healthier, more durable market structure that rewards well-managed assets capable of capturing an outsized share of tenant demand.

On the supply side, today’s oversupply across select sectors and geographies appears increasingly manageable. New construction is slowing sharply across nearly all property types (with data centers the notable exception). Higher labor costs tied to restrictive immigration policy, elevated material prices driven by tariffs, and a shrinking pool of viable development sites (particularly those with sufficient power) are collectively suppressing new supply in 2026 and beyond.

Which brings us back to first principles. This is a market where understanding local supply pipelines, tenant demand, and the ability to generate real operating income will matter most. As today’s excess supply is absorbed and construction remains constrained, we expect demand to once again outpace new supply and create a compelling entry point for disciplined investors willing to focus on fundamentals.