As we look toward 2026, commercial real estate doesn’t feel euphoric — but it does feel steadier. After several years defined by rising interest rates, stalled transactions, and cautious capital, the market appears to be entering a new phase. One marked less by waiting on the sidelines and more by selective deal-making, thoughtful repositioning, and a renewed focus on fundamentals.
In conversations with investors, lenders, and fellow advisors, a consistent theme keeps coming up: the uncertainty hasn’t disappeared, but it feels more manageable. That shift matters. Markets don’t need perfect conditions to move forward — they need clarity, discipline, and confidence in the long-term picture.
A Market Moving from Pause to Progress
Many industry observers believe 2026 could mark a meaningful inflection point for commercial real estate. Not because every problem has been solved, but because several of the biggest unknowns are beginning to settle. Interest rates appear closer to their eventual landing zone, pricing expectations are converging, and the bid-ask spread that froze transactions over the past few years is narrowing.
There is also a significant amount of pent-up demand. Deals that were postponed — not abandoned — are slowly returning to the table. Investors are re-engaging, lenders are selectively opening credit boxes, and sellers are becoming more realistic. The result is not a frenzy, but a market that feels functional again.
Office Isn’t “Back,” but It’s No Longer Frozen
Office remains one of the most debated sectors, but the conversation has clearly evolved. While older, undifferentiated buildings continue to struggle, high-quality Class A assets — particularly in growth markets — are showing signs of renewed interest. Employers that are committed to in-person or hybrid work environments are gravitating toward better buildings that help with talent retention and productivity.
In the Gulf South and select secondary cities, well-located Class A office properties are attracting capital again. At the same time, deeply discounted office assets in traditional gateway cities are drawing value-oriented investors willing to take a longer view and underwrite transformation rather than stabilization. The recovery won’t be uniform, but office is no longer a market investors are avoiding entirely.
Retail’s Quiet Momentum Continues
Retail continues to be one of the more resilient stories in commercial real estate, particularly open-air and neighborhood-serving centers. Vacancy remains low in many markets, new supply is limited, and retailers are being disciplined in their expansion strategies.
What’s changed is the emphasis on placemaking. Retailers are looking for environments that support experience, convenience, and omnichannel behavior. Landlords who have invested in walkability, entertainment, medical, wellness, and service-oriented tenants are seeing stronger traffic and leasing demand. Retail may not dominate headlines, but the fundamentals heading into 2026 remain solid.
Capital Markets: Not Easy, but Improving
Perhaps the most important backdrop for 2026 is the gradual improvement in capital markets. Even modest reductions in interest rates — or simply greater rate stability — could unlock meaningful transaction activity. As financing becomes more predictable, cap rates are likely to stabilize and, in some cases, compress for high-quality assets.
At the same time, non-traditional and private lenders have become a permanent part of the CRE landscape. Debt funds, mortgage REITs, and alternative capital sources now play a critical role in financing transactions, especially for transitional or non-core assets. That flexibility is helping deals get done even in a disciplined lending environment.
Technology and Efficiency Take Center Stage
Another trend likely to accelerate in 2026 is the continued adoption of technology across commercial real estate. From underwriting and data analytics to asset management and reporting, firms are leaning into tools that improve efficiency and decision-making.
As capital returns to the market, consolidation within the PropTech space is expected to increase. Established platforms are acquiring niche technologies, particularly those leveraging artificial intelligence, to streamline workflows and enhance insights. For owners and investors, technology is becoming less about novelty and more about competitive advantage.
Policy and Regulation Remain Wild Cards
While fundamentals are improving, policy considerations remain an important variable. Rent regulation, zoning changes, tax policy, and local governance decisions will continue to influence outcomes, particularly in the multifamily sector and major urban markets.
Investors heading into 2026 will need to remain market-specific and policy-aware. The difference between a good deal and a great one may come down to understanding local regulations just as much as underwriting assumptions.
What This Means Going Forward
The commercial real estate market heading into 2026 feels less about chasing momentum and more about positioning. The last few years have forced discipline back into underwriting, realism into pricing, and patience into capital deployment. Those habits are likely to serve investors well as activity increases.
Rather than a broad-based boom, 2026 is shaping up to be a year of selective opportunity — where fundamentals matter, quality is rewarded, and thoughtful strategy outperforms speculation.
For investors and owners who stayed engaged through the downturn, the coming year may offer something the market hasn’t provided in a while: a clearer path forward.
Justin Langlois, CCIM is a Commercial Real Estate Advisor with Stirling Investment Advisors, specializing in investment sales and landlord strategy across the Gulf South. Contact Justin to talk leasing strategy, portfolio value, or end-of-year positioning.