Real Estate at an Inflection Point

Introduction

2025 marked a stagnant period for commercial real estate. Investors began the year anticipating a rebound after two years of declining values, but global value growth reached only 1.5% through the first three quarters1. Persistent inflation, stoked by tariffs, kept the Fed cautious, resulting in higher-than-expected interest rates, elevated property yields and muted transaction activity. Meanwhile, policy uncertainty slowed occupier decision-making and demand, leaving excess supply—particularly in the U.S.—to pressure rent growth.

As we enter 2026, the outlook is more constructive. A combination of supportive fiscal and monetary policies, along with deregulation, is fostering procyclical growth across most economies. This backdrop strengthens the investment case for real estate, especially for assets that have repriced by 20–25%. Motivated sellers, engaged buyers, and improved debt availability are setting the stage for a rebound in transactions and valuations. Additionally, the widening gap between rising replacement costs and current market pricing suggests the slowdown in new construction will persist, thus prolonging the next real estate upcycle.

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