Top 2026 Commercial Real Estate Issues to Watch

HOUSTON — The commercial real estate market is entering a year of opportunity and challenge, influenced by economic uncertainty, shifting population trends and continued technological innovation. The Counselors of Real Estate, a global organization of property advisers and an affiliate of the National Association of Realtors®, each year offers an analysis of the trends and risks that will shape real estate decisions in the coming year. On Sunday at NAR NXT, The Realtor® Experience, John Hentschel, global chair of The Counselors of Real Estate, unveiled the organization’s 2026 “Top 10 Issues” report. Here are highlights:

1. Fiscal & monetary policy

The U.S. economy remains resilient despite a record $37 trillion in national debt and ongoing uncertainties – from AI to geopolitical tensions. Yet, jobs, consumer spending, inflation and the stock market have remained relatively strong over the past year, the report reads. Rising investments in onshore manufacturing and tariff revenue may further help. But the report notes that commercial real estate has been uneven, with certain sectors struggling more than others – notably the for-sale housing and B and C office markets.

Takeaway: Barring unforeseen events and policy changes, real estate will continue to be a key driver of growth and stability for the economy, in the year ahead.

2. Portfolio risk

Managing risk in commercial real estate has become more data driven. Investors now weigh numerous factors beyond property type and location risks, including potential threats within financing and valuation; insurance; extreme weather and natural disasters; regulatory environments; and even air quality. They’re increasingly turning to technology like predictive analytics, climate-risk software, drone surveys and smart building systems to gauge risks to investments. On-site inspections also remain essential.

Takeaway: Risk analysis is now driving key decisions on which projects to prioritize, informing buy-sell-hold strategies, refinancing and more. “Portfolio risk is something that has moved more to the forefront for investors, lenders, auditors and occupiers,” Hentschel says. “Going forward, risk and resiliency expertise is likely to develop as a specific subset within commercial real estate.”

3. The changing nature of real estate: Back to the fundamentals

Cap rate compression may have been a major driver to profitability in the past, but it can’t be any longer, the report says. Owners and operators are finding they have to do a better job at managing assets more efficiently. Finding the “right” building and managing it well is more critical than simply choosing the “right sector.”

Takeaway: Focus on the basics – location, demand drivers, tenant satisfaction and operational management have become key to growing income streams.

4. Capital sources & flows

The slowdown in transaction volume is making it more challenging to raise money for new real estate investments and leading to less money coming back to investors on their existing investments. Plus, foreign investors have been more cautious, and real estate is increasingly competing against investment in infrastructure, particularly energy and digital infrastructure.

Takeaway: Investors and real estate professionals will continue to find the market for fundraising more challenging and competitive. They will need to work hard to find capital and should be prepared to discuss liquidity, long-term viability and why a property is a smart investment.

5. Transformation of real estate through technology

AI is quickly reshaping commercial real estate, increasing demand for data centers and being integrated into tools designed for financial analysis, underwriting and building operations. Innovators are setting out to simplify and speed up tasks that once took more time and effort to complete. Owners and operators in the future will use AI tech tools for such functions as better organizing data, reviewing contracts and strengthening cybersecurity. Gaining access to the data within a building’s multiple systems, however – such as lighting, access controls and HVAC – has proven challenging.

Takeaway: To prepare for future AI solutions, property owners and operators need to get control of data inputs from multiple systems being gathered by a “fragmented ecosystem of investors, asset managers, property managers, contractors and building systems,” the CRE report warns. “Companies and individuals will have to work harder to understand and innovate – or get left behind in this new fast-paced cycle of AI-driven innovation.”

6. The future of real estate

The rapid integration of AI into commercial real estate offers access to unprecedented data and tools for improved decision-making, Hentschel says. That shift will change the way commercial real estate professionals and investors make decisions – from conventional statistical analysis to the “Bayesian approach.” Named for Thomas Bayes, an 18th century mathematician who studied probabilities, the Bayesian approach factors in probabilities and updates expected outcomes as new evidence becomes available.

Takeaway: Real estate decisions must go beyond “location, location, location.” “We have so much more data and more tools,” the report notes, adding that success will depend on disciplined thinking – using insights to carefully weigh risks, opportunities and long-term outcomes.

7. Global chess: The crisis of confidence & uncertainty

Market uncertainty – from interest rates, tariffs, global shifts and more – can slow investment and demand. “The most certain thing right now is the uncertainty and it’s pervasive,” the report says.

Takeaway: The market requires navigating a “what-if” environment. “Business decisions will need to be weighed carefully, even if they appear to be the right choice today,” the report reads. “There may be a resetting of return expectations across asset classes, depending partly on the movement of interest rates and inflation. Volatility in the marketplace always makes what could have been an easy decision a lot more complicated.” Commercial real estate expertise will grow even more valuable in helping identify opportunities and in navigating these more volatile markets, the CRE report notes.

8. Housing attainability

Rising costs and housing shortages are making it more difficult for renters, first-time buyers, middle-income families and seniors to find suitable housing. In Rhode Island alone, according to the report, 40,000 new housing units are needed to meet current and projected demand. Yet the state hasn’t built more than 3,000 units in any single year in over two decades.

Takeaway: No single solution exists. Incremental, creative and collaborative solutions across public and private sectors are essential to improve housing access and affordability. For example, land use and zoning policies and entitlement requirements could help make building faster and cheaper. “Everyone has a role to play, and it’s everyone’s responsibility to push or pull the lever at his or her disposal,” the report says.

9. Pricing risk

More than $950 billion in commercial loans mature in 2025; maturing loans will remain at peak levels for another two years. This will create pricing and refinancing challenges, particularly in private debt markets. Banks are extending loans to avoid taking back properties, but private debt can carry more uncertainty due to more limited transparency in the underwriting.

Takeaway: Opportunistic buyers are waiting for distressed property that they can pick up at discounts, but it’s been slow to materialize. The continued offloading of this “debt bomb” will likely lead to transaction activity remaining flat in 2026 and 2027 and then a gradual improvement in 2028 as pricing gaps narrow and the market grows more competitive. The CRE report says the industry will need to embrace a holistic approach to valuation and pricing risk, identifying the underlying factors that support value over the long haul.

10. Flow of people

Population growth, migration and household formation are slowing, creating challenges for both residential and commercial real estate. For example, household formation among Millennials is slowing down, and Gen Z has not yet fully entered the market. Also, international immigration has experienced a sharp decline. Overall, household growth in the first quarter of 2025 slowed to 1.26 million annually, well below the 1.93 million average between 2019 and 2022, according to Harvard’s Joint Center for Housing Studies.

Takeaway: With slower population growth, developers and investors will need to rethink strategies and consider renewing their focus on locations with more density than the pandemic-fueled craze of suburban greenfields. “Commercial property owners and developers will need to focus on locations that are able to attract and retain workers, particularly the younger workforce,” the CRE report says. “The ‘build it and they will come model’ is going to be inherently riskier in this slower growth environment.”

© 2025 National Association of Realtors® (NAR)