A Year of Transition – Jan. 12, 2026
The base case for 2026 is a “decaf stagflation” environment with below-trend economic growth, says Newmark Research
Following the “eventful” (to put it mildly) year that was 2025, commercial real estate is entering 2026 in a “relatively calm” state, writes Newmark’s global head of research, David Bitner. Given all the macro events that played out on the domestic and global stage, that’s saying a lot.
In the introduction to Newmark’s just-issued U.S. Commercial Real Estate in 2026 report, Bitner lists the highlights, domestic and global: DOGE, tariffs, Ukraine, Israel, immigration and H1B visas, the One Big Beautiful Bill Act, Federal Reserve independence—the list goes on. “In its sprawl and complexity, 2025 put even the Russian novelists to shame,” he writes. Nonetheless, the year “barked more than it bit, and not only with respect to property markets.”
That isn’t to say that the new year won’t throw any curveballs of its own. Yet amid the turbulence of 2025, CRE proved “more resilient than expected, setting the stage for a measured recovery” across most of the major property types in 2026, the report says.
Newmark Research’s base case for 2026 is a “decaf stagflation” environment, characterized by below-trend economic growth and stubborn inflation, which limits the scope for aggressive interest rate cuts while still supporting gradual improvements in fundamentals. The scenario assumes weak job growth and moderating wage gains, which will be offset by “a continued AI-driven boom that elevates demand directly and indirectly” and keeps inflation tracking higher than labor-market dynamics would suggest.
The report sees 2026 as “a year of transition rather than acceleration” for CRE. “Capital markets, occupier demand and development pipelines are all at important inflection points heading into 2026,” according to Newmark. “Liquidity dynamics, pricing discovery and the pace of transaction activity are evolving unevenly across sectors, while occupiers reassess space needs with greater emphasis on quality, flexibility and long-term efficiency.
“At the same time, constrained construction pipelines and lingering supply imbalances are reshaping competitive positioning across property types, widening the divide between high-performing, modern assets and those facing functional or structural obsolescence.”
The new report outlook examines the forces currently redefining risk and opportunity across property types and markets. It explores where stabilization may give way to renewed momentum, and where challenges are likely to persist.
On a sector-by-sector basis, here’s a high-level summary of the report’s findings:
- Capital Markets. “Renewed deal activity is being driven by shifting debt dynamics and changing pricing conditions.”
- Industrial. “Supply and demand levels are poised to move back into balance.”
- Office. “Office demand will build across markets, returning to historical norms in some and extending its lead among trophy assets.”
- Multifamily. “Slowing supply and stable vacancy are set to shape rent growth in 2026.”
- Retail. “The spending power of coming-of-age consumers will power the retail market past economic obstacles in 2026.”
- Life Science. “This sector’s future will be defined by several key factors amid lingering uncertainty.”
- Data Centers. “Rising demand, alongside power and infrastructure constraints, is reshaping expansion across the sector.”
Bitner notes that amid upside risks in 2026, the Newmark Research team is “more optimistic than we were at mid-year. The key signal to watch for is a turn in the labor market—good or bad.”